mortgage and loan

ECC Capital Reports Progress on Sale of Mortgage Banking Operations, Expected Fourth Quarter Loss and Timing of Anticipated Dividend Distribution

2006-12-11T13:54:00.000-08:00

ECC Capital Corporation ECR, a mortgage finance real estate investment trust (REIT) that originates and invests in residential mortgage loans, today reported that it expects the sale of its mortgage banking business to Bear Stearns Residential Mortgage Corporation (Bear Res), an affiliate of Bear Stearns & Co. (Bear Stearns), to close during the first quarter of 2007.

"Certain required administrative matters have taken longer than anticipated to resolve," said Shabi Asghar, President and Co-Chief Executive Officer of ECC Capital, "but we are continuing to work toward an expedient close of the sale transaction. Transition efforts are well underway and we anticipate that the move of our employees and operations to Bear Res will be seamless to our broker network." Bear Res will continue to operate the business under the Encore Credit name and Mr. Asghar will continue to lead the operation.

The terms of the transaction, announced on October 10, 2006, will result in the sale of certain operating assets by ECC Capital to Bear Res for approximately $26 million in cash and Bear Res' assumption of certain lease liabilities. ECC Capital will retain other obligations arising from its subprime wholesale mortgage banking division, including but not limited to, loan repurchase obligations, remaining leases and personnel related liabilities.

ECC Capital anticipates that fourth quarter 2006 loan production through the expected date of closing will be in excess of $1.2 billion. Affiliates of Bear Res have separately agreed to finance and acquire substantially all of ECC Capital's fourth quarter loan production. These arrangements, along with a simplification of operations, are expected to reduce the cash requirements of funding the operating losses of the mortgage banking operations through the fourth quarter of 2006 and the close of the transaction. However, management cautions that, based on preliminary October and November results, operating losses are still expected for the fourth quarter of 2006.

ECC Capital has announced its intention to make distributions to its stockholders totaling approximately $80 million, or $0.80 per share, within thirty days after the close of the sale transaction with Bear Res. ECC Capital presently intends to declare, in December 2006, and pay, by the end of January 2007, an initial dividend in an amount equal to approximately 85% of its estimated undistributed REIT taxable income for 2006 and then declare an additional distribution following the close of the transaction with Bear Res. The initial dividend would be less than $0.80 per share. The additional distribution would be paid within thirty days after the close of the transaction and be an amount equal to the difference between $0.80 per share and the amount of the initial dividend declared in December 2006, such that the sum of the two distributions would be equal to $0.80 per share.

However, ECC Capital's ability to make distributions totaling $0.80 per share or make such distributions within this time frame will be dependent upon a variety of factors, including, but not limited to, the closing of the transaction with Bear Res, its ability to refinance debt secured by its retained interests in securitizations, the timing of the receipt of certain expected cash flows from its retained interests in securitizations, the disposition of remaining loan inventory and certain other assets, the settlement of various payroll and repurchase obligations and payment of expenses related to the sale transaction.

Following the sale of the wholesale mortgage banking operations to Bear Res, ECC Capital will effectively exit the subprime wholesale mortgage origination business and its remaining operations will consist primarily of the management of its residual interests in its securitizations. The amount and timing of any future distributions will depend on the factors noted above, as well as whether ECC Capital elects to sell these residual interests, in whole or in part, or elects to collect the remaining cash flows over the life of the residual interests. Assuming the sale of the wholesale mortgage banking operations to Bear Res is completed and following any sale of the remaining assets and/or the realization of future projected cash flows from the Company's residual interests, ECC Capital presently believes that it will be able to make total distributions over time to its stockholders of approximately an additional $0.80 cents per share or a total of at least $1.60 per share. ECC Capital intends to maintain its REIT status for the period of time during which it holds the residual interests in its securitizations.

About ECC Capital Corporation

ECC Capital Corporation, headquartered in Irvine, Calif., is a mortgage real estate investment trust (REIT) that originates and invests in residential mortgage loans. Primarily through its wholesale subsidiary, ECC Capital offers a series of mortgage products to borrowers, with a particular emphasis on "nonconforming" borrowers who generally do not satisfy the credit, collateral, documentation or other standards required by conventional mortgage lenders and loan buyers. ECC Capital is currently structured to qualify as a REIT by managing a portfolio of nonconforming loans it originates or acquires. As a REIT, ECC Capital is required to distribute dividends to its stockholders from net income generated from the spread between the interest income on its assets in its portfolio and the costs of capital to finance its acquisition of these assets.

Safe Harbor Regarding Forward-Looking Statements

Certain statements contained in this press release, including statements relating to the proposed transactions with Bear Res and Bear Stearns, fourth quarter loan production, cash requirements and operating losses, and ECC Capital's ability to pay dividends may be deemed forward-looking statements under federal securities laws and ECC Capital intends that those forward-looking statements be subject to the safe-harbor created thereby. These forward-looking statements are based on current expectations and assumptions and are subject to risks and uncertainties, which could affect ECC Capital's future plans. ECC Capital cautions that these statements are qualified by important factors that could cause actual results to differ materially from those reflected by the forward-looking statements. These factors include, but are not limited to: (i) the condition of the whole loan sale market and ECC Capital's ability to improve the value received in the whole loan market for its loan originations, (ii) the condition of the U.S. economy and financial system, (iii) interest rates and the subsequent effect on the business, (iv) ECC Capital's ability to obtain quality loan servicing and default management services, (v) the stability of residential property values, (vi) the potential effect of a failure to close the transaction with Bear Res, (vii) the potential effect of new state or federal laws or regulations, (viii) the effect of increasing competition, (ix) ECC Capital's ability to implement successfully its business plan, (x) continued availability of credit facilities and access to the securitization markets or other sources of capital, (xi) ECC Capital's ability and the ability of its subsidiaries to operate effectively within the limitations imposed on REITs by federal tax rules, (xii) ECC Capital's ability to retain qualified personnel, (xiii) the risks associated with the use of leverage and (xiv) other factors and risks discussed in ECC Capital's Annual Report on Form 10-K/A for the year ended December 31, 2005, which was filed with the Securities and Exchange Commission on October 27, 2006. You should also be aware that, except as otherwise specified, all information in this news release is as of December 5, 2006. ECC Capital undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in ECC Capital's expectations.

QNB launches the most attractive Mortgage Loans ever

2006-08-19T17:39:00.000-07:00

In an ongoing effort to meet the needs of customers, Qatar National Bank (QNB), is announcing its new Mortgage Loans product for Qataris interested in purchasing ready built properties in The State of Qatar.

Aimed at assisting Qataris, QNB's Mortgage Loan is designed to provide finance up to 100% of the property value with a maximum borrowing amount of QR 4,000,000. With a loan tenor of up to 30 years and a grace period up to 6 months, it will enable QNB's valued customers to move and settle into their dream homes and to fulfill their needs of furnishing and other expenses before starting the repayments.

Providing details about the new mortgage loan policy, Mr. Douglas Beckett, General Manager, Retail Banking at QNB said:

'We, at QNB, are extremely pleased to be launching our foray into the market of mortgage loans. With the advent of the extra ordinary growth in real estate sector in Qatar, we feel that this product is the need of the hour. We are convinced that our customers will greatly benefit from this offer especially when it comes to a full finance for their dream homes in addition to competitive interest rates and fees.'

The bank also announced that Qatari customers having their salaries transferred to QNB may benefit from the 100% finance, and if their salaries are being transferred to other banks they still may benefit from up to 90% finance. Moreover, QNB customers having their other income transferred to the bank may benefit from up to 65% finance.

'QNB has always believed in offering its customers the absolute best. We are confident that the host of benefits extended through this mortgage loan policy will be well received by a large number of Qataris. Convenient and cost-effective, QNB's Mortgage Loans are aimed at helping everyone in managing their financial needs,' Mr. Beckett added.

'We are confident that our new policy for Mortgage Loans will attract a new pool of customers who can benefit from this offer either for their own resident or for investment opportunities. This round of revision is aimed at developing and improving QNB's financial products that will reflect positively on the quality of services we offer to our valued customers,' said Mr. Abdullah Nasser Al Khalifa, Assistant General Manager, Retail Assets, QNB.

QNB's Mortgage Loans further enhances the existing products offered from QNB, which allows the account holders a vast spread of exciting benefits including low-interest loans, flexible monthly repayments, and grace period up to 6 months.

QNB launches new mortgage loans for Qataris

2006-08-19T17:38:00.000-07:00

Doha • In an ongoing effort to meet the needs of customers, Qatar National Bank (QNB), is announcing its new Mortgage Loans product for Qataris interested in purchasing ready built properties in Qatar.

Aimed at assisting Qataris, QNB’s Mortgage Loan is designed to provide finance up to 100 per cent of the property value with a maximum borrowing amount of QR4,000,000. With a loan tenor of up to 30 years and a grace period up to 6 months, it will enable QNB’s valued customers to move and settle into their dream homes and to fulfill their needs of furnishing and other expenses before starting the repayments.

Providing details about the new mortgage loan policy, Douglas Beckett, General Manager, Retail Banking at QNB said: “We, at QNB, are extremely pleased to be launching our foray into the market of mortgage loans. With the advent of the extra ordinary growth in real estate sector in Qatar, we feel that this product is the need of the hour. We are convinced that our customers will greatly benefit from this offer especially when it comes to a full finance for their dream homes in addition to competitive interest rates and fees.”

The bank also announced that Qatari customers having their salaries transferred to QNB may benefit from the 100 per cent finance, and if their salaries are being transferred to other banks they still may benefit from up to 90 per cent finance. Moreover, QNB customers having their other income transferred to the bank may benefit from up to 65 per cent finance. “QNB has always believed in offering its customers the absolute best. We are confident that the host of benefits extended through this mortgage loan policy will be well received by a large number of Qataris. Convenient and cost-effective, QNB’s Mortgage Loans are aimed at helping everyone in managing their financial needs,” Beckett added.

“We are confident that our new policy for Mortgage Loans will attract a new pool of customers who can benefit from this offer either for their own resident or for investment opportunities. This round of revision is aimed at developing and improving QNB’s financial products that will reflect positively on the quality of services we offer to our valued customers,” said Abdullah Nasser Al Khalifa, Assistant General Manager, Retail Assets, QNB.

QNB’s Mortgage Loans further enhances the existing products offered from QNB, which allows the account holders a vast spread of exciting benefits including low-interest loans, flexible monthly repayments, and grace period up to 6 months.

How To Avoid Nasty Mortgage Loan Junk Fees

2006-08-19T17:37:00.000-07:00

So, you've taken an application with a mortgage broker. He has told you your monthly payment and the total amount you will need at the time of closing. How do you know the charges on the loan are fair? How do you compare this loan to others you have been offered?

Check the GFE.

The Good Faith Estimate (GFE) can be your weapon to get the fairest price for your loan. If you don’t take a good long look at this infinitely important legal-sized piece of paper, you may just be throwing your money away.

This single document will detail every specific charge on your loan. Not only does it list your charges, it also itemizes them to show whom these charges are being paid to. Don’t just look at the dollar figures on this form. You should pay close attention to the party that collects those dollars. While the big number on the bottom is often scary, seeing all the people that came together to make this happen for you may make it all seem worthwhile.

You can use this breakdown to make sure that each party that collects a fee is being reasonable. You can compare apples-to-apples because all Good Faith Estimates must contain the same information. Also, make sure that what you have is a "Good Faith Estimate" and not just a summary of costs that the mortgage broker put together. They may leave some things out but the GFE keeps them in line because they are required by the government to disclose all fees to you.

Since all fees are disclosed in black and white on the GFE, this makes it a great tool to compare mortgages. More importantly, it makes it impossible for a dishonest mortgage broker to sneak unexplainable charges into your loan. A mortgage broker or bank is obligated to give you a GFE very soon after application. Take advantage of this to make sure you are comfortable with the fees being presented.

My best suggestion to you as a homebuyer is to hold on to the original signed copy of your GFE. This document can be easily compared to the final papers that you will sign at closing. You will notice any changes between these forms because they are set up very similarly. Keep in mind that the numbers will change, that’s the nature of an estimate, however your broker should be able to explain any noticeably large changes.

Mortgage Refinance: Four Refinancing Loan Mistakes

2006-08-19T17:35:00.000-07:00

Even though mortgage interest rates have begun to rise, some homeowners continue to take advantage of mortgage refinancing to save money. Refinancing a home loan has several benefits. Person with adjustable rates can convert to a fixed rate mortgage. Moreover, a cash-out refinance provides homeowners with a lump sum of money, which can be used to payoff debts. Unfortunately, a number of homeowners do not fully understand the refi process. As a result, they choose bad loans. Consider the following refinancing mistakes, and learn how to avoid them.

1. Select the Right Home Loan

A mortgage refinancing creates a new home loan. There are several types of home loans available to suit a range of needs. Before refinancing, research different loans. Finding the best loan with the most savings should be the primary goal. Homeowners must choose between an adjustable rate and fixed rate mortgage. Is a 15-year term, or a 30-year term best? Regrettably, some people rush the process and ultimately choose a bad loan.

2. Closing Costs vs. Refinance

Because a refinance involves applying for a new mortgage loan, homeowners are required to pay settlement or closing costs. The fee is generally 3% - 5% of the home price. Prior to refinancing, homeowners should closely evaluate the fees, and determine whether a refinance is in their best interest. Mortgage lenders may be able to provide a break-even analysis. For example, if the refinance closing fees are $2,000, and the monthly savings with the refinancing is $80, it will take approximately 25 months or 2 years to break even. If the homeowner plans to move within two years, a refinancing is not a wise choice.

3. Private Mortgage Insurance

Conducting your own research when buying or refinancing a home is crucial. Failing do to so means paying more than necessary for the mortgage. For example, the majority of mortgage loans no longer require down payments. On the flip side, homebuyers must pay private mortgage insurance, which is approximately $50 - $100 a month. The good news is that once the loan-to-value of the property falls below 80%, mortgage lenders can cancel PMI. If refinancing a mortgage loan, homeowners should avoid a cash-out above 80%. This way, they avoid paying PMI.

4. Shopping Around for Best Home Loan

Shopping around for a good refinance deal is important. There are a number of shady or dishonest lenders. For this matter, these individuals and companies purposely suggest bad loans or charge excessive rates and fees. Unwary borrowers fall victim to these schemes. Before accepting a home loan refi offer, research different lenders. If possible, contact at least three to four lenders and request a rate quote. Compare the different loans, and opt for the lender offering the best deal.

Banks' U.S. business lending hits record

2006-08-19T17:33:00.000-07:00

AUG. 18 1:38 P.M. ET Banks' U.S. business lending has risen to record levels in recent months, spurred by lenders offering easier terms to help compensate for slower home mortgage activity, economists say.

Outstanding commercial and industrial loans grew by a record $21 billion in the week ended Aug. 2, reaching a record $1.157 trillion, according to the latest data from the Federal Reserve. The total was up about 15 percent from a year earlier.

Commercial and industrial -- or C&I -- loans have been growing at double-digit percentage rates year-over-year since early 2005, and economists say trends in credit supply and demand could continue to support that pace for some time longer.

The growth in business loans reflects an anticipated "handoff" of financing activity from the from the now cooling consumer and mortgage loan markets, said Richard Brown, chief economist for the Federal Deposit Insurance Corp.

Banks are competing fiercely for business borrowers to help offset slower mortgage borrowing and to compensate for narrow yield curves that squeeze profit margins on individual loans. As their lending terms have eased, banks have drummed up more financing for the corporate sector -- whether for mergers and acquisitions, stock buybacks or capital expenditures.

"The conditions seem right for commercial and industrial loans," said Daniel Meckstroth, chief economist for Arlington, Va.-based industry group Manufacturers Alliance/MAPI. "The surprising aspect is: Why isn't capital investment just exploding?"

The sort of steep jump in outstanding C&I loans seen in the latest weekly data was probably driven by funding needs for the recent boom in mergers and acquisitions, rather than capital spending, said John Lonski, chief economist for Moody's Investors Service.

"If it wasn't for acquisitions, equity buybacks and special dividends, business borrowing would be much lower," Lonski said. Many companies have enough cash on hand that they don't need bank credit for capital expenditures, and that's unusual nearly five years into an economic expansion, he said.

Capital expenditures have also been more restrained in the current expansion because firms overspent in the 1990s, Lonski said. "Some of that capital spending failed to boost returns sufficiently, and thus businesses still approach capital spending with greater caution than they did in 1998-2000," he said.

Firms that reduced their debt leverage in recent years now have that much more capacity to borrow, said Meckstroth of Manufacturers Alliance/MAPI. Meanwhile, even with interest rates higher, banks have lots of liquidity and are willing to take more risks, he said.

Finding Affordable Housing — Challenges and Solutions

2006-08-19T08:42:00.000-07:00

So, you have just been promoted and your employer wants you to move to a new location or you have just finished school and have landed your first job. Where are you going to live, how much is it going to cost, and can you afford it?

With the general nationwide increase in housing costs it has become more difficult to purchase or rent decent affordable housing in a safe neighborhood that is reasonably near your work place. You will need to “do your homework” and be knowledgeable of your local housing market and know what resources are available so you can, ideally, purchase a home or, if that fails, optimize the rental unit you choose.

Nationwide, affordable housing is a diminishing commodity. Just about anywhere in urban California and in the major urban areas of the Northeast, finding an affordable home to purchase or rent is difficult at best.

Affordability, specifically the amount of a household’s income to be spent on housing and then the combination of housing and other recurring debt, is a multi-faceted issue.

Usually the first question a household will ask when deciding what the limit or the definition of what constitutes affordable is, “Can we make these payments and still ‘live?’”

How Much Can You Afford?

The answer to that question is quite variable and idiosyncratic, but the goal is to avoid being “house poor.” The mortgage industry and its government regulators have developed some basic guidelines regarding how much household income should be spent on housing and how much on total debt service. These guidelines are fairly accurate predictors of success or failure whether you are renting or buying your home.

The limits for the monthly house payment and overall debt service are expressed in terms of percentages or ratios. In conventional lending your house payment should be no more than 28 percent to 33 percent of your gross monthly income. Your total debt service, a combination of the proposed housing payment and all your other recurring monthly obligations, should be no more than around 45 percent of your gross monthly income. In the jargon of the mortgage industry you will hear these calculations referred to as the “front” and “back” ratios.

According to an article written by Walter Molony at the National Association of Realtors Web site at www.realtor.org/publicaffairsweb.nsf/pages/homeprices3rdqtr05, the third quarter 2005 median price of an existing single-family home in the United States was $215,900. This was an increase of 14.7 percent from the third quarter of 2004. According to an August 30, 2005, news conference on 2004 income, poverty, and health insurance estimates from the current population survey, Charles Nelson, assistant division chief of the Housing and Household Economic Statistics, said, “Median household money income in the nation in 2004 was $44,400, and was unchanged from 2003 in real terms.” www.census.gov/hhes/www/income/income04/prs05asc.html Using the traditional mortgage industry guidelines regarding house payment limits and total debt service limits, what kind of monthly income does it take to live in the median home?

In today’s interest rate environment, roughly 6.375 percent to 8 percent on a 30-year term loan) a conservative, yet reliable and easy to remember, estimate of a total mortgage payment (principal, interest, taxes, insurance — PITI) is about 1 percent of the mortgage amount (e.g., $2,159 on a loan of $215,900).

In order to keep the monthly house payment below the 33 percent of income guideline it would take monthly income of $6,542, or $78,509 a year, to qualify.

As you can see, a household with a single wage earner making the median income would be $34,109 a year, or $2,842 a month, is short of the income necessary to meet the “front ratio” qualifying guideline. Just for reference, a worker earning $7 an hour, just above minimum wage makes $14,560 a year and starting teachers or military officers make in the vicinity of $30,000.

These hard income facts indicate that having two wage earners per household is just about an economic necessity. With other normal debt, i.e. car payment, student loan payment and/or minimum payments on charge cards, the problem is only amplified.

Lots of Help To Find An Affordable Home

Lenders, employers and government at all levels are aware of the challenges involved in finding affordable housing. Each of these groups work internally and in collaboration between themselves and others to come up with solutions to the problem.

Mortgage lenders, out of a sense of corporate responsibility and in order to comply with Federal Community Reinvestment Act (CRA) regulations regarding affordable lending, have developed numerous aggressive lending programs and outreach strategies. The lending programs and the associated underwriting generally allow borrowing with little or no money down, expanded or more flexible qualifying ratios, reduced fees, discounted or waived Private Mortgage Insurance (PMI), and a more forgiving position on certain credit history flaws.

Most of the bigger lending institutions will also have specific CRA lending departments and specially compensated loan officers and lending consultants.

Many larger employers will have various incentives or benefits to help ease the pain and expense of moving. Some common examples are cost of living adjustments, which can be structured to specific markets or urban areas, relocation services (either internal or contracted) that serve as a clearing house of information on the new location, down payment assistance funds, or even programs to purchase an employee’s old home to enable the purchase of a new home. Even smaller employers will have salary adjustments to facilitate getting their workers into some sort of reasonable housing.

Government at all levels is engaged in and committed to getting citizens into affordable housing. Originally these programs were targeted at the very low end of the economic spectrum, but with the persistent increases in the cost of housing and a rethinking of the definition of government-subsidized housing, the size of their clientele group has increased. There are various government programs, mostly administered and directed at the local level, to provide down payment assistance for purchases and rental assistance for those unable to buy.

In collaborative arrangements between lenders and government, there have been numerous lending programs developed that favor or encourage specific clientele groups with special benefits or incentives and/or that target certain census tracts for increased spending or assistance.

Examples of favored clientele groups are workers whose income is below a federally defined limit, teachers, policemen, firefighters and military. Census tracts that draw special attention are those designated as “under served” (many times rural areas) or those designated as “low income.” An expanding area of collaboration is between government and real estate developers.

In these arrangements government will grant zoning or tax concessions to developers who will earmark or reserve a certain number of housing units as “affordable.” These “affordable” units will be priced significantly below the market value of similar units.

The point of the foregoing discussion is that although there are challenges to getting into affordable housing there are also opportunities and resources available the help master the challenges.

As you plan for your move and try to determine whether to rent or buy, do some basic market research, analysis and evaluation to reduce and minimize the risks and to maximize your housing investment.

You want to determine if the housing market in your new city is “soft” or “hot” and attempt to make an informed purchase or rental decision. Some of the basic indicators are the state of the local economy (is it gaining or losing jobs?); the average length of time it takes to sell a home; the number of new housing starts in the area; the state of the rental market; (would you be able to rent your home and for how much?); and the current status and apparent trends in home values; (what is the local median price, are the values increasing, decreasing, or flat?).

Be creative and aggressive in your market research data gathering. You can find lots of information on the Internet (Fannie Mae, Freddie Mac, VA, HUD Web sites, or a search engine like Google).

I strongly recommend finding a mortgage lender (your current bank is a good place to start) that will do a prequalification analysis for you based on your expected income and your current recurring debt.

Next, I would find out exactly what sort of relocation or housing services your employer provides and whether there are additional benefits that can be negotiated in order to support your quest for decent affordable housing.

Similarly, find out where the local government affordable housing organization or agency is located and how to access their information (look in the “blue” or government pages in the phone book). These local government agencies can be a treasure chest of information.

Enjoy Your New Home

Once you have done the research, find a realtor if you intend to purchase a home, or if you decide to rent, find local source that can actually show you where the properties you can afford are located.

If you have the time, investigate what the road network and traffic patterns are like for your drive to and from work or to and from the grocery store or shopping mall, if you have school-aged children try and find out where the better schools are located, check with local law enforcement an see what the crime statistics look like.

Like anything that is worthwhile, finding decent and affordable housing will take work and effort. My recommendation is to be positive, be motivated, do the work and enjoy your new home.

Bill aims to help more seniors tap home equity

2006-08-19T08:40:00.000-07:00

One of the chief knocks against reverse mortgages is that the most popular program does not go far enough in extending seniors the funds they need.

The Home Equity Conversion Mortgage, or HECM, is insured by the Federal Housing Administration, a part of the U.S. Department of Housing and Urban Development, and makes up more than 80 percent of all the reverse mortgages written in the country. The maximum loan limit is pinned to the homeowner's age, home value and home location. The location dictates the maximum claim amount, which varies by county. These amounts can range from $200,160 in rural areas to $335,800 in urban areas.

Last month, the U.S. House of Representatives took a giant step towards eliminating the geographical barrier by passing the Expanding American Homeownership Act of 2006 (H.R. 5121), which would create a single national loan limit for the HECM program equal to the conforming Freddie Mac loan limit of $417,000 for 2006.

A reverse mortgage is a loan that enables homeowners 62 or older to borrow against the equity in their homes, without having to sell the home, give up title, or take on new monthly mortgage payments. Loan proceeds can be used for any purpose, and can be taken out as a lump sum, fixed monthly payments, line of credit, or a combination. The loan amount depends on the borrower's age, current interest rates, and the value and location of the home.

A reverse mortgage does not have to be repaid until the borrower moves out of the home permanently, and the repayment amount cannot exceed the value of the home. After the loan is repaid, any remaining equity is distributed to the borrower or the borrower's estate. A senior's home does not have to be owned free and clear to qualify for a reverse mortgage. Reverse mortgages are often used to retire existing debt on a home.

The early reverse-mortgage programs got a poor reputation because some were flawed and contained huge appreciation shares for the lender coupled with big-time upfront fees. Now, with the federal government insuring a majority of the reverse mortgages with no lender equity shares, the concept has become more acceptable and recognized by consumers.

Raising the local loan ceilings for senior borrowers would be well received. Two privately funded national studies showed participants were frustrated with the inability to fully tap their large and growing equity. Respondents noted their increasing property values and living expenses, as well as their difficulty in making ends meet with the current HECM loan limits.

The Expanding American Homeownership Act, which passed 415-7, would make other substantial improvements to the FHA HECM program. The new legislation calls for a "home purchase" option that would allow people to use a reverse mortgage to purchase newer housing that better suits their needs plus removing the volume cap on the number of HECM loans that FHA can insure.

President Bush also issued a statement thanking the House for passing H.R. 5121and urged the Senate to pass its own version, known as S. 3535.

Rep. Jay Inslee, D-Wash., who co-sponsored the elimination of the loan cap, said a single national limit would put more cash in the hands of more seniors who need it.

"We've found that our country's seniors really need help with health care and assisted living," Inslee said. "They are equity-rich but cash-poor in a lot of circumstances. By freeing up more potential cash from their home, many more of our seniors can live more comfortably."

Another part of the bill would require HUD to study the mortgage insurance premiums charged on a HECM loan. This bill gives the FHA the authority to charge fees based on the borrower's risk of default. Currently, the FHA charges all borrowers the same 1.5 percent upfront fee and 0.5 percent annual fee for mortgage insurance, regardless of the borrower's risk of default.

Under current law, the FHA may guarantee a cumulative total of 250,000 such loans. When Congress created the HECM program in 1988, this 250,000 "cap" was imposed so lawmakers could periodically monitor the program's performance and costs to the government. Now that the program has a track record, there's no continuing need for a cap because the HECM program generates sufficient funds to cover its costs through mortgage insurance premiums paid by borrowers.

ECC Capital Corporation Reports Results for Second Quarter Ended June 30, 2006

2006-08-15T09:21:00.000-07:00

Company Announces Formation of a Special Committee of the Board of
Directors to Consider Strategic Alternatives
Company Maintains Current Policy to Suspend Third Quarter Dividend to
Maximize Capital and Enhance Near Term Liquidity

IRVINE, Calif., Aug. 14 /PRNewswire-FirstCall/ -- ECC Capital
Corporation (NYSE: ECR), a mortgage finance real estate investment trust
(REIT) that originates and invests in residential mortgage loans, today
announced financial results for the second quarter ended June 30, 2006.
Financial and Operational Summary
* Loss for the three months ended June 30, 2006 of $18.6 million or
$0.19 per fully diluted share. Loss for the six months then ended of
$25.0 million or $0.25 per fully diluted share.
* Completed the securitization of $1.1 billion in loans through BMAT
2006-1 during the second quarter.
* Operating costs declined 26.3 % during the second quarter of 2006 as
compared to the same quarter last year, reflecting positive results
from the company's previously announced cost control efforts.
* Cost to originate declined to 2.03% for the three months ended
June 30, 2006.
* Loan production for the second quarter of 2006 totaled $1.5 billion as
compared to $3.2 billion for the second quarter of 2005 and
$1.7 billion for the first quarter of 2006.
* Special committee of the board of directors established to review and
evaluate potential strategic alternatives to enhance shareholder value.
* Third quarter dividend payment suspended; Structural changes, including
REIT status, continue to be evaluated.
The loss for the three months ended June 30, 2006 of $18.6 million
includes accounting adjustments to increase reserves $16.4 million for
expected losses on repurchased loans and to mark certain loans to the lower
of cost or market. In addition, during the second quarter of 2006, ECC
Capital disposed of certain aged and repurchased inventory at a significant
discount to par, which resulted in an overall loss on sale of loans
(excluding accounting adjustments) of $5.5 million. The loss on sale of
loans was partially offset by gains on Eurodollar futures hedging ECC
Capital's held for sale inventory of $5.7 million. The sale of this
inventory, together with a decline in operating costs and additional
borrowings secured by ECC Capital's interests in its securitizations,
resulted in improved liquidity as cash balances increased to $51.8 million
as of June 30, 2006 as compared to $48.2 million at March 31, 2006.
"During the second quarter, our operating costs declined significantly
as a result of the cost containment efforts announced and implemented
earlier this year," said Shabi Asghar, President and Co-Chief Executive
Officer of ECC Capital. "Unfortunately, overall results were negatively
impacted by an increase in repurchase claims related to whole loan sales
made in prior periods. We are currently in the process of managing through
these claims. We've resold a large portion of these repurchased loans, but
at a significant discount to par. For repurchased loans remaining in
inventory at quarter-end, we have marked the loans to the lower of cost or
market. In addition, we have settled the majority of the remaining
repurchase claims subsequent to June 30 and, as of June 30, 2006, we have
accrued the loss we expect to incur upon the final disposition of these
claims. These factors resulted in a loss on sale of loans recorded in the
second quarter."
Financial Results
ECC Capital reported a net loss for the three months ended June 30,
2006 of $18.6 million, or $0.19 per diluted share, as compared to a net
loss for the three months ended June 30, 2005 of $34.0 million, or $0.35
per diluted share. For the six months ended June 30, 2006 and 2005, ECC
Capital reported a loss of $25.0 million and $36.7 million, respectively,
or $0.25 and $0.46 per diluted share, respectively.
A comparison of summary pretax operating results for the three and six
months ended June 30, 2006 and 2005 follows:
Three months ended Six months ended
June 30,
2006 2005 2006 2005
Dollars in thousands
Net interest income $23,875 $28,914 $56,877 $41,151
Provision for loan losses 5,421 3,510 11,520 6,010
Net interest income after
provision for losses 18,454 25,404 45,357 35,141
Gain (loss) on sale of loans
Net execution (5,513) 3,550 (27,043) 10,890
Provision for losses on
repurchases (8,753) (1,982) (16,214) (2,749)
Lower of cost or market (7,636) (1,300) 14,256 (1,417)
Net gain (loss) on sale of
loans (21,902) 268 (29,001) 6,724

Residual mark-to-market gain
(loss) (2,118) (594) (1,489) (4,995)
Derivative gains (losses):
Eurodollar futures 5,657 (7,131) 10,527 (320)
Interest rate agreements 3,198 (10,486) 14,216 (6,015)
Net receipts (payments)
under interest rate
agreements 8,784 (3,360) 13,625 (3,751)
Net derivative gains
(losses) 17,639 (20,977) 38,368 (10,086)

Net revenue 12,073 4,101 53,235 26,784

Operating expenses 29,428 41,597 69,060 73,309
Severance and lease
termination costs 1,226 -- 9,128 --

Loss before income taxes (18,581) (37,496) (24,953) (46,525)
Provision (benefit) for
income taxes 4 (3,531) 7 (9,862)

Net loss $(18,585) $(33,965) $(24,960) $(36,663)

Net interest income
Net interest income for the three months ended June 30, 2006 declined
to $23.9 million as compared to $28.9 million for the three months ended
June 30, 2005. Higher average balances of interest-earning assets drove
interest income higher during the three months ended June 30, 2006 as
compared to the three months ended June 30, 2005. However, net interest
margins narrowed as ECC Capital's cost of borrowing increased
significantly, resulting in a decline in net interest income for the
quarter.
Second quarter 2006 loan production was originated at a weighted
average coupon, or WAC, of 8.28% as compared to 7.27% for second quarter
2005 production. At June 30, 2006, ECC Capital's weighted average cost of
borrowings was 5.63%, as compared to 3.91% at June 30, 2005. ECC Capital's
borrowing costs are indexed to the London Interbank Offered Rate, or LIBOR.
As LIBOR increases, so does ECC Capital's borrowing costs.
The impact of declining spreads was more significant within the held
for investment portfolio, as these loans have not yet reached interest rate
reset dates. LIBOR has climbed steadily over the past 18 months,
significantly increasing the cost of financing this portfolio. A summary of
ECC Capital's interest rate spread as of June 30, 2006 and 2005 is as
follows:
June 30,
2006 2005
WAC - Loans held for sale 8.28% 7.25%
Cost of funds 6.08% 4.39%
Net interest rate spread 2.20% 2.86%

WAC - Loans held for investment 7.21% 7.28%
Cost of funds 5.44% 3.60%
Net interest rate spread 1.77% 3.68%

WAC - Total loan portfolio 7.54% 7.27%
Cost of funds 5.63% 3.91%
Net interest rate spread 1.91% 3.36%
The decline in net interest rate spread for the total loan portfolio
reflects increases in LIBOR. ECC Capital hedges its exposure to the risk of
changes in LIBOR using Eurodollar futures for loans held for sale and
interest rate swaps and caps for loans held for investment. Increases in
LIBOR, which reduce ECC Capital's net interest rate spread on its loans,
increase the value and cash flows received under these derivative interest
rate agreements offsetting in part the reduced net interest income from ECC
Capital's loans.
Delinquencies and provision for losses
During the three months ended June 30, 2006, ECC Capital recorded a
provision for loan losses of $5.4 million, bringing its reserve for losses
to a total of $48.9 million as of June 30, 2006. The reserve balance is
1.5% of the total unpaid principal balance of the loans as of that date.
The provision for loan losses for the three months ended June 30, 2006
exceeds the $3.5 million provision for loan losses recorded for the three
months ended June 30, 2005 as a result of the growth in and seasoning of
ECC Capital's loan portfolio.
At June 30, 2006, total delinquencies were approximately 8.0% and
serious delinquencies (greater than 90 days) were 4.3% of the unpaid
principal balance on ECC Capital's portfolio of loans held for investment.
The portfolio was unseasoned at June 30, 2005 and delinquencies were
nominal. Delinquencies have increased as expected over the past several
quarters as the portfolio has seasoned. ECC Capital believes that it is
probable that losses have been incurred and has estimated those losses
based upon management's experience in working with nonconforming
portfolios. As the portfolio seasons, ECC Capital will experience
additional delinquencies and foreclosures, and will realize losses upon the
liquidation of the underlying collateral. As a result, management expects
that the allowance for loan losses will continue to grow as the portfolio
continues to season.
Loan Sales
A summary of whole loan sales by premium and discount sales follows:

Three months ended Six months ended
June 30,
2006 2005 2006 2005
(in thousands)
Whole-loan sales at a:
Premium $1,233,475 $659,827 $2,818,530 $1,169,338
Discount 117,190 12,281 533,732 35,630
Total whole-loan
sales $1,350,665 $672,108 $3,352,262 $1,204,968

Weighted average
overall price 100.4% 102.2% 100.0% 102.3%
Weighted average price
for premium sales 101.7% 102.4% 101.1% 102.5%
Weighted average price
for discount sales 86.0% 93.2% 94.1% 96.5%
Gain on sale execution on premium sales declined during the three
months ended June 30, 2006 as compared to the three months ended June 30,
2005, largely due to increased interest rates. Execution on premium sales
improved during the second quarter of 2006 as compared to the first
quarter, but overall execution during the second quarter was adversely
affected by the significant discount required to dispose of repurchased and
aged inventory.
Sales volume during the three months ended June 30, 2006 increased over
the three months ended June 30, 2005 reflecting lower sales levels in early
2005 as ECC Capital accumulated inventory for future securitizations.
A summary of the components of gain (loss) on sale follows:

Three months Six months
ended June 30, 2006
Gain (loss) on sale of loans
Premium whole loan sales $22,621 $33,551
Discount whole loan sales (18,206) (33,512)
Yield spread and fees (8,608) (25,762)
Change in lower of cost or
market (7,636) 14,256
Change in reserve for losses
on repurchased loans (8,753) (16,214)
Loss on sale of loans - BMAT
securitization (1,320) (1,320)

Net loss on sale of loans $(21,902) $(29,001)
ECC Capital records a valuation allowance to reduce the carrying value
of its held for sale inventory to the lower of cost or market (LOCOM) at
each balance sheet date. When the underlying loans are sold, the valuation
allowance related to the loans is reduced, offsetting the loss realized in
the period the sale settles. Many of the whole loan sales settling at a
loss during the first six months of 2006 were traded during the fourth
quarter of 2005. These losses were offset, in part, by the decline in the
LOCOM reserve. However, at June 30, 2006, ECC Capital still holds
approximately $90 million in loans originated prior to 2006. During the
three months ended June 30, 2006, ECC Capital increased the valuation
allowance related to these loans reflecting continued deterioration in
value.
Gain on sale for the three and six months ended June 30, 2006 was also
negatively impacted by additions to the repurchase reserve of approximately
$8.8 million and $16.2 million, respectively, related, in part, to losses
ECC Capital expects to realize on higher than anticipated repurchase
volume.
As previously announced, during the three months ended June 30, 2006,
ECC Capital completed a securitization resulting in the transfer of $1.1
billion in mortgage loans to Bravo Mortgage Asset Trust (BMAT 2006-1). The
transfer was accounted for as a sale of loans and ECC Capital recorded a
net loss of $1.3 million on the transaction.
Residual interests in securitizations
Loan pools underlying ECC Capital's residual interests in
securitizations executed in 2003 and 2004 generally performed as expected
with respect to prepayment and loss estimates during the three months ended
June 30, 2006. However, continuing increases in LIBOR reduced estimates of
future cash flows resulting in a reduction in the carrying value of the
residual interests accounted for as trading instruments. During the three
months ended June 30, 2006, ECC Capital recorded a mark-to-market loss of
$2.1 million after the accrual of approximately $1.5 million in interest
income. In addition, a total of $1.1 million was accreted as interest
income related to the retained interest in the BMAT securitization.
Derivatives
Higher interest rates increased the value of ECC Capital's interest
rate derivatives resulting in derivative gains during the three months
ended June 30, 2006. ECC Capital's derivatives are designed to hedge the
risk of an increase in its LIBOR-based funding costs. For financial
reporting purposes, the derivatives are marked-to-market and changes in the
fair value of the derivatives are recorded through the statement of
operations. However, under generally accepted accounting principles, the
assets and liabilities producing the hedged cash flows are not all reported
at fair value and the offsetting effect of changes in cash flows from those
assets and liabilities from changes in interest rates is not fully
reflected in the statement of operations. A small change in interest rates
has a significant impact on the value of ECC Capital's derivatives.
ECC Capital uses Eurodollar futures to hedge the risk of changes in
interest rates and the effect such changes may have on the value of its
held for sale inventory. As a result, derivative gains on Eurodollar
futures for the three and six months ended June 30, 2006 of $5.7 million
and $10.5 million, respectively, partially offset the loss on sale of
loans, excluding the provision for loss on repurchases, for the three and
six month periods then ended of $13.1 million and $12.8 million,
respectively.
Derivative gains for the three and six months ended June 30, 2006 also
include $8.8 million and $13.6 million, respectively, in payments received
from interest rate contracts (swaps and caps) within ECC Capital's
securitizations that offset the noted decline in net interest income.
Operating expenses and cost to originate
Cost to originate(2) as a percentage of production is summarized as
follows:

Three months ended Six months ended
June 30, June 30,
2006 2005 2006 2005
Dollars in thousands
Total operating expenses $30,654 $41,597 $78,188 $73,309
Deferred origination costs 9,846 24,451 21,620 42,486
Net REO gains (losses) (858) -- (913) --
Severance and lease
termination costs (1,226) -- (9,128) --
Loan servicing costs (3,322) (3,071) (7,559) (5,787)
Adjusted operating expenses 35,094 62,977 82,208 110,008

Premiums paid, net of fees
collected (4,137) 13,743 (6,878) 26,666
Total costs to originate $30,957 $76,720 $75,330 $136,674

Loan originations $1,524,476 $3,160,052 $3,248,221 $5,414,467

Total operating expenses 2.01% 1.32% 2.41% 1.35%
Deferred origination costs 0.65% 0.77% 0.67% 0.78%
Net REO gains (losses) -0.06% -- -0.03% --
Severance and lease
termination costs -0.08% -- -0.28% --
Loan servicing costs -0.22% -0.10% -0.23% -0.10%
Adjusted operating expenses 2.30% 1.99% 2.54% 2.03%

Premiums paid, net of fees
collected -0.27% 0.44% -0.21% 0.49%
Cost originate as a
percentage of production 2.03% 2.43% 2.33% 2.52%
Total operating costs for the three months ended June 30, 2006 declined
26.3% to $30.7 million as compared to $41.6 million for the three months
ended June 30, 2005 reflecting lower production and lower resulting
commissions, and the results of management's efforts to contain costs.
Total operating costs for the six months ended June 30, 2006 increased 6.7%
as compared to the six months ended June 30, 2005, reflecting a higher cost
deferral in 2005 as a result of higher production levels and the costs of
ECC Capital's restructuring efforts in the first half of 2006.
As a percentage of production, adjusted operating expenses increased to
2.30% and 2.54% for the three and six months ended June 30, 2006,
respectively, from 1.99% and 2.03% for the three and six months ended June
30, 2005, respectively. Although the dollar amount of adjusted operating
expenses has been reduced, these costs are spread over a lower base of loan
production. Overall cost to originate as a percentage of production has
declined to 2.03% and 2.33% for the three and six months ended June 30,
2006, respectively, from 2.43% and 2.52% for the three and six months ended
June 30, 2005, respectively. This decline is the direct result of declining
yield spread premiums paid to brokers.
Liquidity
As of June 30, 2006, ECC Capital had unrestricted cash balances
totaling $51.8 million, and approximately $2.6 million in net margin
deposits related to investments in Eurodollar futures contracts.
ECC Capital's sources of liquidity have included additional
collateralized borrowings utilizing its ownership interests in
securitizations, loan sales and the BMAT securitization, refunds of income
taxes paid during 2003 though 2005 through carry back of operating losses
and distributions of excess cash flow from its securitizations. In July
2006, ECC Capital received a refund of income taxes paid in prior years of
approximately $27 million.
ECC Capital has either extended or is currently in the process of
renewing or extending the terms of certain of its warehouse lines of
credit. ECC Capital anticipates that existing warehouse capacity will be
adequate to fund expected levels of loan production.
ECC Capital currently believes its current liquidity will be sufficient
to sustain operations for the foreseeable future.
Dividend distribution policy
Depending on the extent ECC Capital is required to utilize its various
sources of liquidity, its ability to pay a dividend may be negatively
impacted. ECC Capital did not pay a dividend in the first or second quarter
of 2006 and does not intend to pay a dividend for the third quarter of
2006.
To retain REIT status, ECC Capital must distribute at least 90% of its
REIT taxable income. If ECC Capital utilizes available liquidity for
operations, it may not have sufficient liquidity to pay the distributions
required to maintain its REIT status. ECC Capital is considering a variety
of strategic and structural changes, which may affect ECC Capital's REIT
status. These and other potential structural changes may or may not require
stockholder approval.
Second quarter loan production
Production for the three months ended June 30, 2006 declined 52% to
$1.5 billion as compared to production of $3.2 billion for the three months
ended June 30, 2005. As compared to production for the three months ended
March 31, 2006, which totaled $1.7 billion, production declined by 12%.
Factors contributing to reduced production include, but are not limited to,
general declines in the levels of mortgage originations resulting from
increases in interest rates and declines in sales of residential housing.
Consideration of strategic alternatives
During the second quarter, ECC Capital's board of directors established
a special committee of the board of directors, consisting of its four
independent directors, to review and evaluate potential strategic
alternatives to enhance shareholder value. The special committee has
engaged Friedman, Billings, Ramsey & Co., Inc. and Milestone Advisors, LLC
as financial advisors to assist it in the review and evaluation of any
potential strategic transactions that might be presented. ECC Capital
cautions that there can be no assurance that the exploration of strategic
alternatives will result in a transaction. ECC Capital does not intend to
disclose developments with respect to the exploration of strategic
alternatives until its special committee and board of directors have made a
decision regarding a specific transaction.
Quarterly conference calls
In order to concentrate efforts on operations and the evaluation of
strategic alternatives, ECC Capital's management and board of directors
have concluded that ECC Capital will discontinue conference calls to
discuss quarterly results. Additional information regarding ECC Capital's
financial position as of June 30, 2006 and its results of operations for
the three and six months ended June 30, 2006 will be available in its
Quarterly Report on Form 10-Q expected to be filed today with the
Securities and Exchange Commission.
About ECC Capital Corporation
ECC Capital Corporation, headquartered in Irvine, Calif., is a mortgage
real estate investment trust (REIT) that originates and invests in
residential mortgage loans. Primarily through its wholesale subsidiary, ECC
Capital offers a series of mortgage products to borrowers, with a
particular emphasis on "nonconforming" borrowers who generally do not
satisfy the credit, collateral, documentation or other standards required
by conventional mortgage lenders and loan buyers. ECC Capital is currently
structured to qualify as a REIT by managing a portfolio of nonconforming
loans it originates or acquires. As a REIT, ECC Capital is required to
distribute dividends to its stockholders from net income generated from the
spread between the interest income on its assets in its portfolio and the
costs of capital to finance its acquisition of these assets.
Safe Harbor Regarding Forward-Looking Statements
Certain statements contained in this press release, including
statements relating to ECC Capital's repurchase loss expectations,
portfolio performance and allowance for loan losses, liquidity, recovery of
prior year taxes, warehouse capacity, ability to pay dividends and
consideration of strategic alternatives, may be deemed forward-looking
statements under federal securities laws and ECC Capital intends that those
forward-looking statements be subject to the safe-harbor created thereby.
These forward-looking statements are based on current expectations and
assumptions and are subject to risks and uncertainties, which could affect
ECC Capital's future plans. ECC Capital cautions that these statements are
qualified by important factors that could cause actual results to differ
materially from those reflected by the forward-looking statements. These
factors include, but are not limited to: (i) the condition of the whole
loan sale market and ECC Capital's ability to improve the value received in
the whole loan market for its loan originations, (ii) the condition of the
U.S. economy and financial system, (iii) interest rates and the subsequent
effect on the business, (iv) the stability of residential property values,
(v) the potential effect of new state or federal laws or regulations, (vi)
the effect of increasing competition, (vii) ECC Capital's ability to
implement successfully its business plan, (viii) continued availability of
credit facilities and access to the securitization markets or other sources
of capital, (ix) ECC Capital's ability and the ability of its subsidiaries
to operate effectively within the limitations imposed on REITs by federal
tax rules, (x) ECC Capital's ability to retain qualified personnel, (xi)
the risks associated with the use of leverage and (xii) other factors and
risks discussed in ECC Capital's Annual Report on Form 10-K for the year
ended December 31, 2005, which was filed with the Securities and Exchange
Commission on April 17, 2006. You should also be aware that, except as
otherwise specified, all information in this news release is as of August
14, 2006. ECC Capital undertakes no duty to update any forward-looking
statement to conform the statement to actual results or changes in ECC
Capital's expectations.
For Further Information:

AT THE COMPANY:
Roque A. Santi
Chief Financial Officer
(949) 856-7611
rsanti@encorecredit.com

June 30, December 31,
ASSETS 2006 2005

Cash and cash equivalents $51,790 $46,904
Restricted cash 2,500 18,600
Other receivables 9,414 24,966
Mortgage loans held for sale, net 1,456,662 2,744,423
Mortgage loans held for investment,
net 3,218,059 4,222,063
Accrued mortgage loan interest 40,801 46,840
Residual interests in
securitizations 64,475 14,753
Prepaid expenses and other assets 52,601 30,502
Derivative instruments 70,314 58,948
Equipment and leasehold
improvements, net 10,437 14,422
Income taxes receivable 29,199 31,197

Total assets $5,006,252 $7,253,618

LIABILITIES AND STOCKHOLDERS'
EQUITY

Warehouse and repurchase facilities $1,388,734 $2,708,266
Advance on uncompleted loan sale 15,109 --
Long-term debt 3,184,103 4,166,127
Securities sold under agreements to
repurchase 66,817 13,074
Accounts payable and accrued
expenses 91,266 63,236
Dividends payable -- 18,044

Total liabilities 4,746,029 6,968,747

Commitments and contingencies -- --

Stockholders' equity 260,223 284,871
Total liabilities and
stockholders' equity $5,006,252 $7,253,618

For the three months ended For the six months ended
June 30, June 30,
2006 2005 2006 2005
(unaudited)
Revenue

Interest income $101,349 $62,547 $217,180 $88,086
Interest expense (77,474) (33,633) (160,303) (46,935)
Net interest
income 23,875 28,914 56,877 41,151

Provision for
loan losses -
Loans held for
investment 5,421 3,510 11,520 6,010

Net interest
income, after
provision for
loan losses 18,454 25,404 45,357 35,141

Gain (loss) on
sale of loans,
net (21,902) 268 (29,001) 6,724
Gain on trading
securities and
derivative
instruments, net 15,521 (21,571) 36,879 (15,081)

Total revenue 12,073 4,101 53,235 26,784
Expense
Personnel 12,351 19,857 32,011 34,980
Production and
marketing 3,691 4,714 6,226 8,450
Servicing fees 3,322 3,071 7,559 5,787
Occupancy expense 1,639 2,056 3,836 4,024
Severance and
lease
termination
costs 1,226 -- 9,128 --
General and
administrative 8,425 11,899 19,428 20,068

Total expenses 30,654 41,597 78,188 73,309

Loss before
income taxes (18,581) (37,496) (24,953) (46,525)

Provision
(benefit) for
income taxes 4 (3,531) 7 (9,862)

NET LOSS $(18,585) $(33,965) $(24,960) $(36,663)
Net loss per share
of common stock
Basic $(0.19) $(0.35) $(0.25) $(0.46)
Diluted $(0.19) $(0.35) $(0.25) $(0.46)

(1) WAC reflects the stated interest rate on loans and does not include
the effect of amortized origination fees and costs. Cost of funds
reflects the stated interest rate on the related debt and does not
include payments or receipts under ECC Capital's interest rate
derivatives or any amortization of bond discount or deferred issue
costs.

(2) Cost to originate is a non-GAAP financial measure within the meaning
of Regulation G promulgated by the Securities and Exchange
Commission. It represents the reported operating expenses, the most
directly comparable GAAP measure, of ECC Capital before the deferral
of origination costs under SFAS No. 91 (Accounting for Nonrefundable
Fees and Costs Associated with Origination or Acquiring Loans and
Initial Direct Costs of Leases) plus the net fees paid to or received
in connection with originating the mortgage loans less (i) the direct
costs associated with servicing ECC Capital's portfolio of mortgage
loans and (ii) the severance and lease termination costs associated
with ECC Capital's announced restructuring and (iii) net REO gains
(losses) on ECC Capital's held for sale portfolio. Companies in ECC
Capital's peer group measure their operating efficiency in a similar
manner enabling comparisons of overall operating efficiency. These
factors make total cost to originate a useful measure of the
efficiency of ECC Capital's production operations. Over time, loan
sale prices need to exceed ECC Capital's cost to originate if ECC
Capital is to be profitable.

Bad Credit Mortgage Lender - What To Look For

2006-08-15T09:03:00.001-07:00

If you have less than perfect credit and are looking to get approved for a mortgage loan, be careful not to make some common, costly mistakes. When dealing with sub-prime mortgage lenders or bad credit mortgage lenders, many people are taken advantage of because of their eagerness to get approved.

Choosing and settling on a mortgage lender or mortgage broker is a very important decision. Make sure you don't make mistakes that you will regret later.

Ask yourself, the mortgage broker or lender these questions before you sign on the dotted line:

1. Is there a pre-payment penalty on the loan? Ask about this as soon as you are told you are approved. A 6 month pre-payment penalty is probably ok, but 1 year, or two years? Over 1 year is too long. Find out how much the pre-payment penalty is. Maybe its not much. But if there is one, its most likely to be so much, that it would defeat the purpose of refinancing the loan before the penalty time is up. If you are get a mortgage loan with a poor credit score, and then make your mortgage payments on time, you are likely to be able to refinance in 6 months to 1 year for a much better interest rate. You don't want to hurt your chances of doing that with a heavy pre-payment penalty. Sometimes brokers will neglect to tell you about one.

2. What will the interest rate be? Sounds obvious, but lock down exact numbers. Don't settle for vague answers on this. Brokers may promise you a low interest rate, but as it gets closer, end up locking you in at a much higher rate. If you are doing a combo loan, 80/20, the second mortgage may end up being the one that has an interest rate that surprisingly jumps up as it gets close to the loan closing. Try to negotiate a lower interest rate, especially if you are going through a mortgage broker, they will usually have some play in this area.

3. Is my mortgage broker being too pushy? If you feel your broker is being too pushy, there may be something in the loan that is not in your best interest. Ask a lot of questions and don't be afraid to start searching elsewhere. When getting a mortgage loan, you don't want to be in too big a hurry.

4. Can I afford the payment even I am not able to refinance for a lower rate within 2-3 years? Many people get into a sub-prime mortgage loan with a higher interest rate, just because they are happy to get approved, only to feel suffocated later, when they cannot refinance and get out from under the high payment. If you don't think you could make the payment for at least the next 2-3 years with no problem, then you shouldn't be getting into the loan.

5. What are my closing costs going to be, exactly? Bad credit mortgage lenders and mortgage brokers know that the person they are extending the loan to doesn't have as many options. These lenders and brokers can sometimes take advantage of that fact by upping the fees at closing. Make sure you see what all of your fees are going to be in writing before you commit to the loan. Compare those fees with other lenders and make sure they are comparable. If there are a little high, try negotiating with your mortgage lender or broker. They will usually be able to make changes there if they choose to.

Bad Credit Mortgage Lender - What To Look For

2006-08-15T09:03:00.000-07:00

Pros and Cons of Debt Consolidation

2006-07-31T17:17:00.000-07:00

4 Pros and 4 Cons
Debt consolidation is one of the most important financial decisions some people will face in their lives. When debt begins to overwhelm your life, bills seemingly coming at you from all angles, the idea of simplifying your debt into one manageable bundle seems enticing.

The most common form of debt consolidation involves applying for a debt consolidation loan. A debt consolidation loan condenses all of your monthly payments into one bill. Debt consolidation should not be confused with bankruptcy, in which all debts are cancelled and your credit rating plummets. Debt consolidation is more akin to refinancing, in which old loans are reviewed and renewed, only under more favorable terms.

Sounds rosy enough, but before you decide to consolidate your debts, take the time to weigh carefully some of the pros and cons.

Pros
Simplified money management. Rather than paying a dozen or more bills each month, debt consolidation allows you to make a single payment that encompasses all of your debts. Clearly, this is a big pro in favor of debt consolidation. Who doesn?t know the feeling of anxiety as bills begin to pour in? There are credit card bills, utility bills, medical bills, car loans, student loans, gas cards, and any combination of late or overdraft fees that you may have accumulated. It?s enough to make anyone?s head spin! The idea of having all these debts condensed into one simple monthly bill is very attractive indeed.
Lower monthly payments. Obviously, of you must only pay one bill a month, your monthly payment will automatically be lower than it was before. Thus, you will be granted substantial relief in your monthly spending.
Reduced Interest Rate. A debt consolidation loan will generally come with a lower interest rate than you were paying on your credit cards.
Relief from creditors. The peace gained from not having to deal with creditors is a welcome refuge for anyone who has experienced the anxiety of being sought by creditors.
Cons
Your debt?all of it?still exists. Some people get the idea that debt is somehow lessened simply by the act of consolidating it. This is simply not true. By consolidating your debt, you are merely adding it all together and condensing it into one large loan.
You will probably take longer to pay off debts. Because debt consolidation usually minimizes your required monthly payment, you can expect it will take longer to pay off your debts entirely.
You will probably pay more in the long run. Again, those comfortable monthly payments mean that your debt is being stretched over time. Expect to pay more over time, as finance charges on interest rates add up quickly.
Debt consolidation may encourage a false sense of security. Having your debt consolidated may create the sense that your debt is under control. This false sense of security is dangerous because it could lead you to overextending yourself again. Some argue that debt consolidation treats the symptoms of the problem.

After weighing carefully the pros and cons of consolidation, if you do decide to apply for a debt consolidation loan, you should know that the type of consolidation loan you qualify for will depend on various factors. Some of the factors lending institutions consider in deciding whether to approve you for a debt consolidation loan include whether you have an adequate credit rating, if you hold some sort of equity, and whether you have a consistent income source.

Shop around to find a lender who will offer you the best consolidation loan for your specific situation. Loans vary widely in length, interest rate, amount loaned, and the type of interest rate (fixed or adjustable). The interest paid on these loans is usually secured by equity on a property, such as your home.

Another form of debt consolidation involves the use of credit counseling services. Credit counseling services help individuals regain control over their finances by helping them reduce their debt in various ways. These services often serve as an intermediary between you and the company you owe money to. Credit counseling services can intervene on your behalf, often convincing companies to reduce interest rates and cancel fees. Credit counseling services can also help teach you important money management skills.

Closing the Deal: Plowing through the Mortgage Paperwork

2006-07-31T17:14:00.000-07:00

Paperwork can be trying at even the best of times. It can take tons of time to fill out loan applications and you might ask yourself why they need such detailed information? But you need to remember that this is one of the biggest purchases you will ever make it your life, and you should take the time to ensure that your application is complete and accurate. Mistakes on your mortgage application or agreement could be costly.

When applying for a loan, most lending institutions and agencies have a standard or uniform residential loan application. The information required is broken down into several sections.

Type and Terms of Mortgage

Under this category you will select what type of mortgage you are applying for. This section will also detail important information like the amount being borrowed, the interest rate and the length of the loan.

Property Information and Purpose of Loan

Here you will need to specify what the loan is for, specifically what kind of property. Is it for the purchase of an already built property or for construction or for refinancing?

Borrower and Co-Borrower Information

In this section you will need to include your current and previous address. If you have a co-borrower, you will also need all of this information from him or her.

Employment Information

The institution or agency lending you money will want to ensure that you are applied and will continue to be employed for the foreseeable future. You need to list your occupation, the contact information for your current employer and the amount of time you have been working at this job and in this profession. You will also need to provide your monthly income. Your co-borrower will also need to fill out this section and if you have more than one job the lender needs the contact information and salary for both of these employers.

Monthly Income and Expenses

You will need to provide the bank with a good idea of your current financial situation. Part of that is figuring out how much money you have coming and going out every month. Under the income category you will need to include your monthly salary, overtime, commissions and dividends or interest credits you receive. Under expenses you can your rest, taxes and insurance monthly costs.

Assets and Liabilities

Here you need to list any accounts and stocks and bonds you have, as well as the name, address and account number of anyone you owe money to.

Details of Transaction

This section lists all the amounts that apply to your purchase transaction including purchase price, cost of any alternations or repairs and your closing costs.

Declaration

You will need to declare (by checking “yes” or “no”) certain facts about yourself. Be careful and honest in this section – because when you sign this application you are essentially guaranteeing that all the information on it is correct. The questions might touch on bankruptcy, alimony and child support payments and involvement in lawsuits. If you lie in this section, it could seriously jeopardize your chance of getting money from any lend institution.

There are little details that you need to be on the lookout for. Ensure that you sign everywhere that is required and that the contact information you provide for yourself and for your employer is complete and accurate. You may also be required to initial certain places – like the bottom of every page.

Here's a good tip to keep in mind. You should obtain two copies of your loan application so you have one to practice on and then just copy all the correct information onto the one you are going to submit. This way you will not be frustrated if you get right to the end and make a mistake and have to start all over again. You have a practice copy and a good copy ready for submission to your lending institution.

Remember that there are professionals who can you help make this process easier for you. Consult your real estate agent or your lawyer or lending institution directly if you are unsure of something or have concerns about some of the information required for your application. Asking questions now could save valuable time later.

What You Should Know about Closing Costs and Fees

2006-07-31T17:13:00.000-07:00

Closing costs can often add up when you have taken out a mortgage. By knowing what closing costs and fees will apply, you will be prepared for closing and owning your home. Closing costs include things such as real estate transactions, attorney fees, appraisals, credit reports, prepaid interest, homeowner?s insurance, title insurance and reserves that the lender collects for future taxes and insurance. Each of these different aspects of closing costs can add up when you have made all of the payments towards your home or loan that you think is necessary. It is estimated that closing costs will be an average of $3,000 to $4,000, depending on the types of inspections, insurance and documentation that needs to be prepared and finished before you can own your own home.

The first fee which will be a part of closing costs is the appraisal. This will give you an estimate of how much your home is worth at the time of closing. It includes giving you information and documentation on what will be the highest and best use for your property. These usually cost an estimated $200-$450, depending on the area in which you live and the value of real estate at that time. A second type of fee is the commitment fee. These fees are charged by investors or lenders have committed to your loan. A third documentation fee is the application fee. This is taken at the time of closing if your loan closes.

Another type of fee to keep in mind with the closing costs is attorney fees. Attorneys are used for the loan closing of the mortgage and usually review all of the documentation available for the closing costs. Another cost will be for a broker. This will be for the administrative, processing and transaction fees that take place between the broker and mortgagee. If document preparation is performed by a third party, other than the broker, there will be another charge for this. This may include documentation such as deed of trust, warranty deed, housing authority addendum, release of trust and power of attorney. It may also include other closing loan contracts or documentation such as processing costs. There is also a closing fee which is charged. If the closing fee is closed by a third person, such as a real estate person, there may be a customary cost.

Other costs will come from inspection of the home and insurance. The most common type of insurance that you will need is home owners insurance. This type of insurance is required to get at least one year in advance to protect the assets in your home as well as your home. Title insurance is also required to buy once your home is off of the mortgage. This will insure a lender of any liens on the property. Loans will not be closed until inspections are made and this type of inspection and insurance is resolved. Another possible type of insurance is those used for a flood plan. If you are living in a flood zone, you must pay for flood insurance at the time of the loan closing. There is also a possibility of getting a flood certification. This will allow you to continue have flood zone status during and after the mortgage. It will be paid at the time of closing. Another type of insurance is hazard insurance premium which will be added in closing costs. There are also inspection fees at the time of closing. This includes a home inspection service fee, which usually is around $300. Pest inspection may also be a separate fee which is included in the closing costs. A third type of inspection that may be included is a well and septic fee, if this is part of your home.

Another kind of cost which will be added during closing costs includes property taxes and assessments. The most well known deposit for taxes is known as an escrow. This is set up so that your taxes will continue to be paid after the loan and begin with a deposit at the time of closing. Transfer taxes are the other type of taxes available at the time of closing.

When looking into closing your mortgage, it is important to find the lowest fees and best way to get the documentation without having too much hassle. There are several ways to get free quotes and to find the proper tools in order to keep closing costs down and make the process of owning your own home as simple as possible.

Choosing The Right Loan For You

2006-07-31T17:12:00.000-07:00

Over the past decade, thanks to a real estate market that has been performing consistently well, home equity financing has become a viable option. This in turn has made the credit or loan option for home equity financing for consumers worth considering. Since everyday Americans realize the value of owning one?s own home to raise capital and refinance debt, home equity as a solid foundation is a powerful financial base to build on.

The year 2003 was a rollercoaster ride for the American stock market, but was consistently steady for the real estate market. Though the prices of homes continued to soar, it proved to be a happy trend as it proved that people still saw a home as a smart investment. This is good news for you, house owners?it signifies that despite the economic outlook, the value of your home continues to appreciate. This perhaps should give you the impetus to consider taking a financing option such as a home equity loan or line of credit.

Why consider home equity: Take for instance the rising worth of your own home and the boom in the real estate market?two solid reasons for you to seriously consider taking home equity financing. For one, home equity financing comes with a lot of tax advantages for you. You might also be able to reduce your taxes by claiming the interest you pay on your home equity credit as a deduction. Speak to your tax consultant about this. If you want to borrow money or secure your debt, you?ll find home equity products a smart choice since they carry a lower interest rate than other loans and may, therefore lower your monthly payments.

How to leverage your home equity financing: If you want to get the best out of your home equity financing, you could choose to do it as most people do: use it to refinance your debt and pay back higher-interest loans. But if you are fortunate enough not to have loan balances to repay, you can further raise the value of your house by improving it. Perhaps you want to give a facelift to your kitchen or garage? Perhaps you need to add a second storey? These projects can easily be financed by home equity credit. Take a look at just how fellow-Americans get the most out of their home equity. And then, put it down to the boom in the real estate market.

Your kind of home equity plan: You can choose from either a home equity loan or a home equity credit line?something that largely depends on your needs. But to set yourself into estimating how much financing you require, you should consider a home equity loan. If you do, you will need to borrow only as much as you need for your home improvement project. But if you can?t estimate your needs, your best bet is a home equity line of credit might be a better choice. This is also helpful if you have more than one need such as reducing your credit card out standings and debt, besides also paying for a big purchase?both of which will demand ready access to huge sums of cash.

If your need is for stability or flexibility, yet again, home equity loans give you a steady payment plan. This means that your interest rate and monthly payments remain fixed over time. On the other hand, a home equity line of credit is as flexible an option as a credit card with your payments being judged against how much you borrow and the interest rates varying proportionately with a change in Prime Rates. And, if you need financing all together or once in a way, think again because a home equity loan can give you all the money you need all at once too! Besides, with this, you can borrow as much as you like when you want it, just so long as you remain within your prescribed credit limit.

Financing your home is a big decision for you. True, there are very many home equity loan products available today, but you need to think well about the home equity line of credit that suits your financial goals.

Crossing That Bridge Loan When You Come To It

2006-07-31T17:10:00.000-07:00

What exactly is a bridge loan and what can it do for you? A bridge loan is simply a short-term loan used by a person or business that needs a fast cash infusion until permanent financing can be achieved. A bridge loan, sometimes referred to as a swing loan or gap financing, is generally expected to be paid back very quickly. Most bridge loans have a term of about six months to one year.

When would someone need a bridge loan? Bridge loans are often used by prospective home buyers who are ready to buy, but who have not yet sold their current home. When the housing market is booming and houses are selling within days or weeks of being listed, a bridge loan makes little sense. But what about those times when the housing market seems to be moving along at a more reasonable pace?

Imagine, for example, that you find your dream home. You are eager to purchase it, except for one major setback: you need to sell your current home first. In the meantime, you can snatch up that dream house by applying for a bridge loan. A bridge loan can allow you to pay off the mortgage on your current house, or gather enough cash to make a down payment on your dream house while you wait for your current home to sell. In hindsight, the opposite situation would be ideal: selling your home, and then finding your dream home. But since life, and especially issues of personal finance, are not always ideal, a bridge loan is a viable option for anyone who finds themselves caught in between.

The terms of a bridge loan can vary widely. Some types of bridge loans allow you to completely pay off the mortgage on your current home. A fairly typical bridge loan might work as follows: the bridge loan is used to pay off the mortgage on your current home, and the rest of the money is used to make a down payment on your new home. In this type of scenario, closing costs and six months of prepaid interest are normally subtracted from the loan amount. If the first home is not sold after a period of six months, the borrower is usually allowed to begin making interest-only payments on the bridge loan. When the first home is sold, the bridge loan can be paid off in its entirety, with any unearned interest payments credited to the borrower.

Be warned that using bridge loans in this way?to span the disparity between two separate transactions?can be costly. Bridge loans often come with high fees, so make sure you understand the terms of your loan before signing. Also, be prepared to face the possibility of having to pay the equivalent to three mortgage payments (your current house, new house, and the amount of the loan itself) until your home is sold. Before even considering a bridge loan, speak to your real estate agent. Find out how long homes in your houses? price range are taking to sell. If the housing market is so slow that you expect your home to remain unsold for many months, a bridge loan may not be such a good idea.

Bridge loans are also commonly used in real estate investing. Individuals interested in investing in real estate property, but who may not have access to conventional loans, can use a bridge loan to make the purchase. Individuals who use bridge loans may be unable to qualify for conventional loans due to credit problems. Thus, many bridge loans are often available through non-traditional lenders, who offer interest rates ranging from 14 to 20 percent. These lenders often also charge ?points?, or fees, on these loans. One point is one percent of the total loan amount. Because these lenders are not as concerned with credit ratings as traditional lenders, bridge loans are much more accessible, though also much costly.

Bridge loans offer a fast and relatively easy way to receive a fast cash infusion. But they are also saddled with higher than average fees and interest rates. The best advice regarding bridge loans is also perhaps the simplest: don?t use them unless you really have to

Keep An Eye Out For Crooked Mortgage Companies

2006-07-31T17:09:00.000-07:00

Don?t Lose Your Shirt or Your Home ? Keep an eye out for crooked mortgage companies

4 Tips to Make You More Aware

Everyone wants to buy their own home and the most convenient way to do this in a ?rush, rush world? like today, is by applying for a mortgage loan. The mortgage loan business is a big one. There are hundreds if not thousands of them trying to lure you in, but you have to beware and watch out for crooked mortgage companies. These crooked companies are out there and won?t care if your loose your home, your savings or even if you go bankrupt. They especially like to prey on the first time home buyer. These companies are looking out for themselves not you, so when you start your hunt for a mortgage make sure you don?t fall into their trap, no matter how seductive their deals may sound. Here are a few tips to help you point out a crooked and fraudulent mortgage company.

Be aware if the lender doesn?t give you a good faith estimate of what the closing cost will be. Under The Real Estates Settlement Act they must provide you with this information within three days once you have applied for the loan. An honest lender will give this to you without a problem as they have nothing to hide. Some of the really good lenders will even give you a good faith estimate on your pre?qualifying information. Also watch out for any company that won?t give you information on any of the costs up front, such as interest and other fees.

Beware if the lender says it is ok for you to lie about any information, especially about your income on a mortgage loan to increase your chances of approval. Any sort of lying on any loan form is classified as fraud and is a criminal act. Besides if a lender does encourage you to do such a thing, use your common sense, if they give you the leeway to do it, then they will probably have no problem committing fraudulent acts upon you.

Beware of interest rates that are amazingly low or incredibly high. Low interest rates can be very tempting, especially when they beat everyone else by two or three percent. You may think that this will save you money, but in the long run it will only cost you more because most loans with a low interest rate like these tend to increase significantly throughout the time line of the loan. People with a less than perfect credit rating usually fall needlessly victim to high interest rates that are usually two or three percent higher than everyone else. There are many places online that offer to check interest rates against your credit and can give you an accurate estimate of how much you should be paying.

Be aware if you feel pressured into applying for a mortgage loan that you don?t understand, can?t financially afford or if you are told that you are only going to get the loan through that certain company. If you do feel unsure of anything with a loan, ask them to explain it to you in detail or go to someone else who you can trust. You may want to speak with a lawyer and ask them to go through the loan with you. If you are being pressured to go with a certain company for a loan, then don?t do it. If they can offer you a loan then so too will other companies and without all of the pressure.

When seeking a mortgage loan, make sure that the contract does not differ from the original contract. Companies that ask for more signers, credit insurance, or prepayment penalty fees are probably looking for ways to make money off of you and don?t have your best interest in mind. In this case, you should take your business else where.

These are just some of the things you should look out for when mortgage loan hunting so you are not caught in a trap by a corrupt company. If you are ever in doubt, don?t use the company, as there are many more to choose from that will be happy to take your business and will offer you assistance with anything you are unsure of.

House Rich and Cash Poor ? A Mortgage That You Can Afford

2006-07-31T17:05:00.000-07:00

There are many factors to think of when buying a home. Many home buyers then to overlook financial factors and can become financially strapped before they even know what is happening. That is why when you start looking for a home you should take every single fee into account, both in terms of mortgage and payments after you have bought your home. We will go through some things that shouldn?t be over looked so that you can buy a home that you can truly afford without having any fees or other obstacles popping up in your road unexpectedly.

The first things you need to think of are these factors:
How much will your down payment be? Most mortgage companies usually want between one and twenty percent.
What size mortgage will you need to get and what term will you need to get it for, fifteen years or thirty years?
How are you going to pay for the closing costs on the mortgage? This is one of the things many people tend to overlook at first. This could come straight out of your pocket, or as part of your mortgage down payment, or will it be tacked onto the mortgage?
How much will your mortgage cost you at the end of it all, with all the interests and fees included?
Once you have figured out what amount of monies you will need, you will have to think about these factors:
Are you going to be able to afford the repayment costs each month along with other living expenses?

For example:

Your utility payments
Your auto payment
Your insurance payments
Food and healthcare costs
Other debts and misc. expenses

How are you going to pay your mortgage, along with everything else, if you happen to fall into financial hardship?

All these things will come into account when you have a mortgage loan and you might not even consider them at first. Just because the mcompany gives you the loan doesn?t mean that you really can afford it. It is one of the things you will have to be careful about and really think about before taking the loan so you don?t get in over your head.

Another thing people tend to overlook when buying a home is the costs of:
Your Lawyer
The Evaluator
Pest Control
Escrow
The real estate agent, if you use one
Will you be able to afford any repairs and anything else that is needed on your new home before you are able to move in?
How about after you have found and bought your home, will you be able to afford things such as:

Renovations you would like to carry out
Decorating and remodeling expenses
New furniture and household goods
Maintenance
General upkeep of the place
Your insurances
How about a security alarm
Another thing you should consider is your plans for the future. Do you plan to get married soon? Start a family? These are things that you should consider when weighing your financial strengths. Greater expenses can add a burden to you mortgage payments.

As you can see the cost in a home is huge when you first delve into the whole process and a lot more complicated than most think at first. You should sit down and take them all into account before even applying a mortgage. Try using one of the mortgage or loan calculators on the internet first, just so you can get a fair idea what you are heading for in terms of money. When you do finally take a step into buying your own home you should seek the advice of a mortgage professional who can go through your budget for you and help you determine exactly what you can afford. They will help you find a home and a mortgage that will meet your budget so you never fall into a financial trap or bite off more than you can chew.

With the right planning and the right mortgage, you can buy and enjoy the benefits of owning your own home and know that it is truly one that you can afford for years to come.

Are you paying too much for your mortgage insurance?

2006-07-04T14:17:00.000-07:00

Most of us, struggling to make our mortgage payments, realize the importance of financially securing our home and our lifestyle by putting in place some life insurance. Your bank or lending institution does too! They will usually require that the loan amount be covered by life insurance to protect them in the unfortunate situation of you dying before the loan is paid.

The problem is that most of us are so excited about buying our new home, we quickly checkmark the box to indicate that we want the mortgage life insurance without checking the market to see if you are paying too much. For smokers or unhealthy individuals, this type of creditor insurance can be an excellent value. For the vast majority of us, healthy, non-smokers, will likely get a better rate by shopping the market.

As a life insurance advisor, I can compare products from over thirty Canadian life insurance companies to get you the best value in the market place.

If you would like to see if I can save you some money on your life insurance, please send me the following information by e-mail or give me a call: mortgage owner's name, sex, birthdate, smoking status (yes/no) and the approximate amount of your outstanding mortgage/loan.

We want to help you secure your family's financial future by ensuring you have the money to keep your home and lifestyle if you die prematurely. Contact us for more information or learn more about term insurance on our website.

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Late Mortgage Payments Sabotage PMI Cancellation

2006-07-04T14:13:00.000-07:00

Late Mortgage Payments Sabotage PMI Cancellation

There's something you should know about PMI!

Private mortgage insurance is commonly referred to as PMI. If a buyer makes a down payment of less than 20% of a home's value the lender will insist that a premium for PMI be added to every monthly payment.

Statistics prove that the more money a buyer has invested in a home the less likely they are to default on mortgage payments. With less than 20% down lenders want added security for the loan and so PMI was developed. Nice for lenders... expensive for borrowers.

The federal Homeowners Protection Act of 1998 mandates two ways to cancel PMI.

1. When regular monthly payments have paid down the loan balance to less than 78% of the ORIGINAL APPRAISED value of the home. Current appraised value does not count even if the value of your home has doubled.

2. If you pay an extra amount over and above the monthly payment so that the loan balance falls below 80% of original value.

The act excluded FHA loans made before 2001. Mortgage insurance on those loans can never be canceled.

What if you bought a home in Southern California and the value shot up 40% during a ten month period? That's not covered in the Homeowners Protection Act, but most lenders will listen to a request to cancel the PMI... but not during the first two years of the loan.

After two years the lender will require that the value of the home has increased to the point where the loan is 75% or less of the potential selling price. Then they may release the buyer from PMI premiums. You must ask!

WARNING! THIS CAN BE EXPENSIVE!
Many homeowners make a huge mistake when they are late with mortgage payments. If you have a poor payment history the lender is not required to lift the PMI. You will be out a huge amount of money... over many year as you continue to make those PMI payments... even though your loan balance is well within the lenders normal limits.

PMI makes it possible to buy a home with a small or no down payment, but don't be fooled. It is very expensive and every homeowner should do what's necessary to get rid of it as soon as possible.

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Mortgage Leads, You Get What You Pay For

2006-07-04T14:10:00.000-07:00

There are many mortgage lead companies out there to choose from. Each with their own individual way of obtaining leads to sell to loan officers. But remember, you get what you pay for.

Lead companies sell their leads in a variety of ways. Some allow you to cherry pick, some allow you to set up a filter, and some only sell in bulk.

The pricing on leads from company to company varies also, as you?ll see, it depends on what you are buying.

Some lead companies buy their leads from other companies and sell them in bulk, or recycle them at a profit.

Some lead companies sell their leads ?fresh? or ?real time,? meaning the lead is brand new. Approximately ten minutes old by the time it reaches you.

When you are buying leads that have been recycled, you will most likely get a lot of them. Lets suppose you have one hundred dollars to spend on recycled leads. This will get you about fifty leads at two dollars a piece. This is a lot of leads to work with. However, the quality of the leads will leave a lot to be desired. You will also find that you wasted not only your money but your time as well. Calling fifty people takes a while.

Now, if you decide to buy ?real time? leads, that same one hundred dollars will get you any where from five to eight leads, but remember, these leads are fresh, they are hot off the press, so your chances of closing a few loans are much better than if you bought recycled leads.

Remember. You get what you pay for.

Also, when you are buying leads, it is important for you to know where the leads are coming from.

Have you ever had the painful experience of calling someone, and having them say to you; You are the twentieth person to call me this week. Or, I applied for that months ago, I closed the loan last week.

I was a loan officer for a number of years and I know the feeling.

When you hear responses like the ones you heard in the above paragraph, it should be an indication to you that the leads you bought have been recycled.

Most likely they have been passed around from lead company to lead company.

When you are doing your research for a good lead company, make sure you talk to a representative from that company, and find out where the leads are coming from. If the representative can?t give you a clear answer than move on.

The best lead companies to deal with are the ones that own and operate their own sites where prospects can come on and fill out on-line applications. This way you know exactly where the lead is coming from, and you don?t have to worry about being the tenth person to buy the same lead.

If you decide to buy leads from a lead company, make sure you do your research. Research is the key. You have worked hard for your money, so make sure the leads you buy give you a good return on your investment.

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Home Loans and Mortgages ? Beware of Deed Theft Scam

2006-07-04T13:46:00.000-07:00

The average home in the United States has a value of $206,000, a record amount. Real estate prices have been rising throughout the country during the last five years, and homeowners have seen the value of their property skyrocket. In California alone, the equity in private homes has increased by more than one trillion dollars in the last five years alone. Many homeowners do not even realize that their home may be worth hundreds of thousands of dollars more than they know. Unfortunately for them, a new breed of thieves is well aware of the value of home equity, and a scam known as ?deed theft? has allowed them to steal homes from thousands of people.

Deed theft is simple in principle. The perpetrators of deed theft post flyers around town offering ?foreclosure help.? They seek homeowners with mortgages who may be experiencing some temporary financial setback that threatens them with foreclosure. It?s not uncommon for people who have been living in their homes for years to have a sudden financial emergency that prevents them from making their house payments. Perhaps a job loss or illness is to blame. The economic downturn of the last five years has left a lot of people struggling to pay their bills, and these are the people that the deed thieves seek. Their flyers promise to help those in danger of having their homes taken through foreclosure. The thieves meet with the homeowners and ask to have the title to the home transferred to them. In exchange, the ?rescuer? will promise to pay the delinquent bills and rent the home to the victim for a year or so at a fair price. During this time, they say, the homeowner can save their money or pay off other bills. At the end of that year, the victim can buy the house back from the ?rescuer.?

This seems like a friendly gesture, except that the ?rescuer? has no intention of selling the home back to the victim. Once the title is signed over to them, they legally own the home. They may evict the victim, sell the home, or borrow against it, and there is little recourse for the victim, who is now nothing more than a squatter. Many of these victims fail to realize that they may have had hundreds of thousands of dollars in equity in their home or that their mortgage company may have been willing to either refinance their home or assist them in some other way with making their payments, perhaps by assisting them with to debt consolidation.

This scam is currently popular across the country and homeowners could easily avoid being victimized by simply calling their mortgage company at the first sign of financial struggle. Mortgage companies aren?t really interested in foreclosure; they?d much rather get paid if at all possible. Before accepting the ?help? of strangers who post signs on streetcorners, homeowners should start by asking help from those with whom they are already doing business. Doing so could not only save the homeowner money, it could save the homeowner?s house.

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Do You Know the Pros and Cons of Interest Only Mortgage?

2006-07-04T13:43:00.000-07:00

Has any lender ever told you the Interest Only Mortgage was like a double-edged sword? It can help you achieve your dream of owning a home more easily, but it also can create a financial hardship for those who don?t fully understand what?s involved.

In the attempt to lure potential homebuyers, the lenders have come up with various creative mortgage options. One of the more popular offers is the Interest Only Mortgage. As the name implies, with Interest Only Mortgage, the monthly payment will be applied to the interest portion only. In a traditional mortgage option, the monthly payment applies to both interest and principal, even though, in the early years, interest portion is much more than the amount paid to the principal.

Interest Only Mortgage has become more popular to new homebuyers for the following reasons:
? Since the monthly payment is low, the savings can be used for personal spending, paying off higher interest debts, buying furniture for the new house, or even investing.
? The interest paid to the Interest Only Mortgage is still eligible for tax write-off at the end of the year.
? Some Interest Only Mortgages allow you to make a principal payment during the interest only period. This helps reduce your balance the following month which lowers your payment further.

However, Interest Only Mortgage is not for everyone.
? Beware a potential prepayment penalty for the first 1-3 years imposed by some lenders.
? You have to play the ?catch up game? once you begin to pay the principal. The amount is much more since you didn?t pay during the interest only payment years.
? Think twice before committing to an Interest Only Mortgage if it?s the only way for you to afford a house

Little Known Secret: Eliminate your Mortgage in 23 years

2006-07-03T14:43:00.000-07:00

Wanna know a little secret? There is an ingenious method you can use, to pay off your 30 year fixed rate loan, in 23 years or less. It?s straightforward, simple, and easy to understand. In this article, we?re going to explore this little known secret, and we?ll provide several examples of how it works, a few methods on how to implement, along with some information on where to go and how to get started.

1. Accelerated Payments:

By accelerating the payment structure on your loan, the life of the loan is reduced:

In a normal 30 year fixed rate loan situation, your monthly payment is applied towards principle and interest. It is amortized over the course of 30 years.

So any money above and beyond your normal payment is applied solely towards the principle of the loan.

By reducing the principle of the loan, you are reducing the total amount of interest that must be paid, and that equates to an early loan payoff.

2. An Illustration:

You bake a cake (principle), and put it in the oven. Once the cake is out of the oven, you?ll need to frost it with icing (interest). Let?s say your cake is 12 inches in diameter, and let?s say you need 3 jars of icing.

But you?re hungry, so you eat half the cake early. Now, the cake is only 6 inches in diameter. Because of this, you only need 1 jar of icing.

By reducing the cake (principle), you?ve reduced how much icing (interest) you need.

Furthermore, it takes less time to frost 1 jar of icing.

So, by paying a little more in principle, you reduce the interest owed. That reduces the life of the loan.

3. Methods:

Think of it this way: All you have to do is make 1 extra monthly house payment a year. Do that and you reduce the life of your fixed rate loan by about 7 years! You can be as creative as you want to accomplish this, but here are 3 known methods:

Bi-Weekly Payments: Normally, you make your house payment once a month, or 12 times a year. But with a Bi-Weekly payment structure, you take your normal house payment, and divide it by two. This is the amount paid every two weeks, instead of once a month. By doing this, you basically make 1 extra (monthly) payment a year.

Double Payments: Double Payments simply means an extra house payment. Once a year, you write out a check for twice the amount. So, if your house payment is normally $1,000 a month, then on December 1st, for example, you?d write out a check for $2,000. This, in essence, accomplishes the same thing that Bi-Weekly Payments accomplish. You make 1 extra payment a year.

1/12 increase in payment: Increase your monthly mortgage payment by 1/12, and you accomplish the same thing. Let?s say your house payment is normally $1000. 1/12 of your house payment is $83. So, you start making payments for $1,083. Guess what? Your loan is paid off in about 23 years instead of 30.

Sidenote: A ?Bi-Monthly? payment is not necessarily the same thing as a Bi-Weekly payment. It may just mean that you are paying ? your monthly payment on the 15th and ? is paid on the 30th. The key is this: Are you paying a little more each year, such as 1 extra house payment? If you are, then early payoff is your ripe reward!

4. Here?s an Example:

Bob has a $300,000 loan at 7% interest, and his monthly mortgage payment is currently $1995.91. Each year, Bob pays $23,950.92.

Bob calls his lender, and his payment schedule is restructured as a bi-weekly payment. Every two weeks, Bob writes a check out for $997.96. Because of the two extra payments this year, Bob will have paid $25,946.83. His loan is reduced by about 7 years.

Or, on December 1st, Bob writes out a check for $3,991.82. Because of this 1 extra payment, Bob will have paid $25,946.83. His loan is reduced by about 7 years.

Or, Bob pulls out his calculator, and adds 1/12 to his monthly payments, which equates to $166.33. Bob now writes out a check each month for $2,162.24. At the end of the year, Bob will have paid $25,946.83, and his loan is reduced by about 7 years.

5. The Next Step:

How disciplined are you? Because, if you?re not disciplined at all (like myself), then what are the chances of you sticking with the program? Call your lender, and set up the bi-weekly payment. This way, you are totally hands off and it will all become automatic and habitual. You can always change it back if times get rough, but at least there?s no temptation to revert back to cheaper payment.

Or, do you have online bill-pay with automatic payments? If so, go into your bank online, and add 1/12 to your monthly payment.

Can you afford to accelerate your payments even further? Adding 2 extra monthly payments a year, for example, reduces your loan by about 10 years. Of course, now it might be time to consider examining a new secret strategy, the 15 year fixed-rate loan!

We?ve enjoyed providing this information to you, and we wish you the best of luck in your pursuits. Remember to always seek out good advice from those you trust, and never turn your back on your own common sense.

Learn About your Home Mortgage Options

2006-07-03T14:37:00.000-07:00

VA-Guaranteed Loans

If you are a veteran of military service, reservist, or on active military duty, you may be able to obtain a loan guaranteed by the Department of Veterans Affairs (VA), which requires little or no downpayment. Get more information about the VA Loan Guaranty program.

Rural Housing Service Loans

The Rural Housing Service (RHS), which is a part of the US Department of Agriculture, offers Section 502 Direct and Guaranteed Rural Housing loans to homebuyers located in rural areas. Section 502 Direct loans offer reduced interest rates to lower-income borrowers who qualify, and are arranged directly through local USDA County Agents or through USDA Rural Development state offices.

A limited amount of funding is available for Section 502 Direct loans, so some lenders also offer ?Leveraged Loan? programs. Leveraged loans combine a Section 502 Direct loan that carries a low interest rate with a conventional, market-rate loan. The ?blended? interest rate on the resulting loan is lower than the current market rate as a result of the combination of the rates on the two loans.

The Section 502 Guaranteed Rural Housing Loans are arranged through participating local lenders and are available to a broader range of borrowers. Click here to find out more about RHS loan programs.

Home Equity Line Of Credit Or Second Mortgage Loan Online

2006-07-03T14:35:00.000-07:00

If you are wanting to get a home equity loan, rates are still low enough that you may want to make use of that equity in your home. Do you need some ideas on what you could do to multiply your equity or make some extra money off of the capital that could be available to you?

Here are some suggestions of ways to put the equity to good use when you go to take out a home equity or cash out refinance loan.

1. Do a home improvement that will increase the equity in your home more than the cost of doing the improvement. As an example, I have heard rumors that adding a deck to a home, because of the amount it increases the homes resale value, can add up to 4 times the cost of actually installing the deck.

2. If you have a low interest rate on your home, invest your equity in a low risk investment that has a much higher return on your money.

3. Buy an existing business or start a new business with the equity capital in your home. If you can start a low risk business, take the opportunity to let your equity work for you.

4. Use the equity as a down payment on an investment property or a rental.

5. Use it to consolidate high interest debt and possibly save yourself hundreds of dollars a month to put toward something else.

6. Use it to finance your education and increase your earning power.

7. If you live in an area zoned for this, you could finish a basement or area of the house to rent out. You could create a separate living space or apartment on your property.

Just be careful to not do anything risky with the equity in your home. If you can get a low enough rate, it may be worth taking that money and investing it somewhere else.

How To Save Money On Your Mortgage

2006-07-03T04:26:00.000-07:00

Obtaining a home loan is arguably the most expensive transaction you?ll experience in your lifetime. Therefore, getting the best home at the greatest value is an endeavor worth pursuing. Whether you?re trying to squeeze in to a higher priced home or just trying to shave a couple bucks off of the closing costs, this article will help you explore your options.

Here?s a list of our top 7 things you can do to cut corners and save money on your mortgage

Shop Rate!

Shop Fees!

ARMs

Balloons

Interest Only

Incentives

PMI

1. Shop Rate!

Sometimes the obvious just needs to be stated out loud: Lenders do not charge the same rate. Some charge more, and some charge less.

Obtain several loan offers for consideration, and compare the rate.

If a lender offers you an unusually low rate, check for fees, points, and additional charges or changes in terms.

Don?t fall into the trap of just going with the largest bank on the block. Do your homework and check your lender?s background and reputation, but open your doors to all the choices that are available to you.

Obtain 3 or 4 loan offers, and check to see how the rates being offered compare to the current interest rates. Our website offers a directory of resources and a ratewatch, and there are many other websites available to you through your favorite search engine that offers similar, free information.

2. Shop Fees!

Lenders charge different types of fees in varying amounts. You may see them stated as ?points?, ?origination fees? or ?costs?. Whatever name is used, they represent the lenders? profit. Some lenders are willing to earn less, and some lenders? charge more in fees.

Obtain 3 or 4 loan offers and compare the quoted closing costs.

If you see unusually low interest rates, check to see if there may be unusually high origination fees or points being charged.

If you don?t see any fees or points being charged, then check the rate and terms of the loan to see that it meets with your satisfaction.

Always compare fees and rates in conjunction with one another, and never settle for just one loan quote when shopping for a mortgage. Your home loan is just too important not to do your own homework.

3. ARMS:

An adjustable Rate Mortgage, in the right economical climate, can be an excellent way to lower payments.

With an ARM, the lender agrees to charge you a lower interest rate. This can save you hundreds of dollars off your monthly payment.

Often times an ARM carries a fixed period where the rate cannot change, such as one year for example.

If interest rates stay low, then an ARM can offer you an attractive way to obtain affordable real-estate and save money.

A word of caution: There are many variables to consider with an ARM, and it is important that you understand them before signing on the dotted line. Our website has an excellent article available to you; entitled ?Is an ARM Right For you?? should you wish to explore this option in further detail.

4. Balloons:

Another way to lower your monthly house payment is by structuring your loan using a Balloon, or by ?floating a balloon?.

The loan is amortized over a given period, say 30 years, but there is a final lump sum due at the end of a fixed period, and this is called the ?balloon payment?.

This fixed period is typically between 5 to 10 years.

This type of loan lowers your monthly payment, but be prepared to make new decisions when the fixed period is up, because your loan ends at that point.

Consider floating a balloon with caution, of course. Use this to compare against ARM loan products, to determine which one may be right for you.

5. Interest Only:

With an Interest Only Mortgage, you are only obligated to pay interest.

This first phase of the loan, interest only obligations, is typically 5 to 10 years.

After that, the loan is fully amortized for principal and interest.

So, for a 30 year fixed, that would mean that interest only payments are available the first 10 years, and then principle plus interest payments must be paid for the remaining 20 years.

Typically, this type of loan is very attractive for folks in commission-based employment, or where revenue is cyclical. In other words, you can up your payment to pay off principal, when it?s most convenient for you.

Once again, this is an excellent loan product to lower monthly payments, and it can be compared to ARMS and floating Balloons.

6. Incentives:

Are you in the market for a brand new home? If so, check to see whether or not your builder offers incentives, such as the following.

The builder may pay additional points to help you lower your rate.

The builder may offer cash-back credits.

The builder may offer savings if you go through their own or recommended lender.

Builders are motivated to get their homes sold, so of course they can go build more. This allows you an opportunity to save money either in the purchasing of the home, or the back-end closing costs.

7. Closing Costs:

Take a look at all your closings costs, to see if there are additional savings that can be made:

PMI: Property Mortgage Insurance is typically required when you have less then 20% to put down. However, laws change all the time and homes can rise in value quickly. Check to see whether or not you have the right to have the PMI removed now or down the road.

Discuss all the closing costs. Find out whether some of them may be negotiable.

Review the charges for a variety of other significant closing costs, such as Title Fees, Credit Reports, etc., and compare with your other loan offers.

We?ve enjoyed providing this information to you, and we wish you the best of luck in your pursuits. Remember to always seek out good advice from those you trust, and never turn your back on your own common sense.

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Disclaimer: Statements and opinions expressed in the articles, reviews and other materials herein are those of the authors. While every care has been taken in the compilation of this information and every attempt made to present up-to-date and accurate information, we cannot guarantee that inaccuracies will not occur. The author will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.

Mortgage prepayment penalties - Just say no

2006-07-02T03:22:00.000-07:00

One of the most common terms found in a new home loan is a prepayment penalty. This type of penalty says that if the borrower pays off the loan early, commonly during the first five years of the loan, then the borrower will be responsible for paying an additional amount of money, typically about six months interest on 80% of the mortgage balance. Sub-prime market loans will typically carry prepayment penalties more than standard mortgage loans.

You may plan on keeping the house for the entire duration of the prepayment penalty, and be tempted not to worry about it much. But sometimes life circumstances change, so it's wise to avoid any type of prepayment penalty if you can. A typical prepayment penalty might equal five months worth of monthly loan payments, so it's worth checking on. Of course, you should always ask (before you sign) if a new loan has a prepayment penalty. In fact, ask the lending officer to point out to you in the document where a prepayment penalty is discussed.

Most items in a loan are subject to negotiation. If you haven't signed loan papers yet, and you find that your loan has a prepayment penalty, you might offer to pay an additional closing point or so to see if it can be removed. The key at this stage is that if you agree to the prepayment penalty, you should try to find ways to reduce either the amount, the term, or both as much as possible.

If you already have a loan, you are bound by the terms of the document, unless you can negotiate them. There are perfectly legitimate reasons why you may want to pay off a note early - most often, due either to refinancing or selling the house. You may be able to contact your lender to see if they will waive the prepayment penalty if they are able to provide refinancing. If interest rates have dropped a lot, and you can't get out of the prepayment penalty, it may be worth rolling that amount into a new loan. And of course, try to get the new loan without a prepayment penalty.

Online Mortgages in 5 Easy Steps!

2006-07-01T13:51:00.000-07:00

We're all entitled to the opportunities and benefits of home ownership. But because most of us aren't loaded with cash, we must find banks and lenders to assist us with finance. No matter what your credit history is, or what your circumstances are, the internet has now made this process a billion times easier. This article will outline a 5 point plan, to assist you in your pursuit of financing online:

Step 1: Don�t be afraid to go shopping.

Discussing personal mistakes in life can paralyze us with fear, namely, getting into the �bad credit� issues.

The good news is that for the most part, getting into this �stuff� is completely unnecessary in the preliminary phase of shopping for a loan, beyond the basic information provided in an online short-form.

In other words, you don�t really have to talk about the nitty-gritty details, until after a loan offer has been presented to you. We�ll get into that later�

But since we�re on the subject, if you are a consumer with credit history issues, let me briefly take this opportunity to state the obvious:

1. You�re no different then anyone else. We all live imperfect lives.

2. Credit problemss do not make you a bad person, they are simply reference points.

3. There are loan products designed for you.

4. There are lending institutions that are interested in earning your business.

5. There is nothing wrong with you, or your credit, or your situation. You are who you are, and that�s just fine!

You need to first get into the right frame of mind. Don�t be afraid to ask questions, and don�t be intimidated by your credit history. Be honest. Give truthful information. But don�t feel shame or regret for your past or present personal circumstance. They make you who you are, and that earns you respect! So with that said, put on your confidence, and let�s GO!

Step 2: What�s the going rate?

Information is free, so why not be informed? Many resources are available on the internet to get current interest rates, including a rate-watch at our website:

So to start with, take a look at two pieces of information:

1. Current Interest Rate, 30 year fixed

2. 6 month trend graph

A little exercise: Do you see the current rate? What about the 6 month graph. Are rates going up, down, or staying about the same? Is the current rate higher than it was 6 months ago? Lower then 6 months ago?

Now don�t feel the need to analyze this information too much. Relax. For now, just look at it, and perhaps, check it several times a week to stay informed.

If you do this, you�re already 10 steps ahead of the game!

You are now an informed shopper. When an offer is presented to you in the near future, you�ll be able to ascertain how good an offer it actually is by knowing how it compares to the �going rate�. (sidenote: Don�t forget to check terms, fees aka: �points�, and conditions relating to your loan offer. Often times you will see higher points or less favorable terms, in exchange for a lower rate.)

In addition, you�ll be able to assess if you think rates are declining or on the rise, which may help you to decide if �NOW� is the right time.

Step 3 � Obtain several offers, and SHOP RATE!

When you buy a car, do you seek out the best deal? When you go grocery shopping, do you consider which store offers the best prices?

Shopping for a mortgage should not be seen any differently, and the best way to do this is to obtain several preliminary loan offers online.

1. Preliminary loan offers are simple, painless, and easy to get.

2. They contain the terms, rates, and pertinent information you need to assess the lenders.

3. They will take all the guesswork out of where you stand.

Get 3 or 4 offers, and compare them. How do they compete against each-other? How do they compare to the going interest rates (see step 2 above).

Our website has compiled an index of hundreds of lenders and institutions that provide these preliminary services. This information is free, and available for you to peruse at your leisure.

Many of these companies� conduct searches of thousands of lenders, a lot of them in your local area, and they provide you with 4 loan offers almost instantly.

Take advantage of this! These are no obligation services, and for the most part, the online application forms are simple, fast, and easy. They literally can take no more then a couple minutes to complete.

In addition, you don�t need to be burdened with going through your credit history at this phase. Completing the simple form is all it takes. If you qualify, and a lender is located that wants to do business with you, then you�ll go to the next step which is to discuss this possible opportunity over the phone.

But isn�t it nice to know that by that point, the lender has basically, already approved your loan?

Step 4: A couple things to keep in mind

1. Lenders should never ask you for personal or private information during this preliminary phase. Of course they�ll need to know some basic information about you and your situation, but never give out information you feel uncomfortable disclosing (such as your social security number), and look for a �privacy policy� on their website.

2. Remember that these are �preliminary� loan offers, which means no immediate commitment on your part. You complete a simple, on-line short-form, and then you get several offers in return. The lenders that made the offers may wish to talk with you over the phone, but that�s where the preliminary process ends. The ball is in your court to choose a product that meets your needs, or to keep shopping.

3. These services are offered for �FREE� and you should not be asked for any service charges at any time, ever!

Step 5: Understanding your Options

Let�s put this all together.

If you�ve followed this simple plan, you will discover that there are indeed consumer loan products tailor made to meet everyone�s needs. Remember to examine the terms and rates, obtain several loan offers, and then talk to the lenders over the phone. Find out who they are, and whether or not you�d like to do business with them. Throughout this process, stay informed by checking interest rates.

We�ve enjoyed providing this information to you, and we wish you the best of luck in your pursuits. Remember to always seek out good advice from those you trust, but never turn your back on your own common sense.