Loans Expert

Ford Motor Credit is expected to sell $1.09 billion of asset-backed securities supported by auto loans early this week, said market sources on Monday.

JP Morgan Securities, Morgan Stanley and RBS are underwriters for the multi-part offering whose largest tranches include $285 million of A1-plus 0.31-year short-term notes, $203.8 million of AAA-rated one-year notes, $382 million of AAA-rated two-year notes and $144.6 million of AAA-rated three-year notes, market sources said.

The deal’s smaller tranches include a $32.05 million AA-rated 4.12-year notes, $21.4 million of A-rated 4.41-year notes and $21.4 million of BaBB-rated 4.21-year notes, market sources said. Price guidance for the upcoming deal were not immediately available.

The federal government’s loan modification program, designed by the Obama administration to forestall the skyrocketing number of home foreclosures in the United States, is not effective enough, a report said this week.

The Congressional Oversight Panel, in a 216-page report, said that the Treasury Department is struggling to get the program running and come to the aid of the majority of homeowners in trouble. As a result, the foreclosure crisis has continued unabated, the panel said.

The panel monitors the government’s activities surrounding its financial bailouts and other programs that aim to address the financial crisis.

U.S. mortgage rates fell this week after a month of increases coinciding with the Federal Reserve ending its purchases of home loan debt.

Rates for 30-year fixed loans dropped to 5.07 percent for the week ended today from 5.21 percent, mortgage finance company Freddie Mac said in a statement. The rate touched an eight-month high last week after the central bank on March 31 ended a program to buy $1.25 trillion of mortgage-backed securities.

“There was a little bit of a hiccup,” said Donald Rissmiller, chief economist at Strategas Research Partners in New York. “When the dust is settled, the Fed has been able to back away from the market without too many problems.”

Shortly after President Obama pushed his health care reform through Congress, Idaho became the first state in a growing coalition rallying against the bill as an unconstitutional act of the Federal Legislature. At the same time, the state’s budget cuts to higher education are forcing college students to pay higher and higher tuition rates. How are these distinctly divergent concepts linked?

The answer is simple. The bill not only changed the face of health care in America — it also revamped the student loan system. “What’s gotten overlooked amid all the hoopla, all the drama of last week, is what’s happened with education,” Obama said in a speech at Northern Virginia Community College, reported by the New York Times.

As Congress dives into one of its first big post-spring recess issues — financial reform — Sen. Carl Levin kicked off the final leg of the largest investigation on Capitol Hill into what caused the near collapse of the nation’s financial system.

Levin, D-Detroit, on Tuesday launched hearings by the Senate Permanent Subcommittee on Investigations that focused on high-risk mortgages given by banks to homeowners who either weren’t aware of loan terms that resulted in skyrocketing payments or couldn’t initially afford the terms. Levin chairs the committee.

The nation’s leading consumer banks gave a grim assessment of the mortgage industry today in testimony on Capitol Hill. Chief among them was Bank of America’s head of home loans who said a “considerable number of customers” will lose their homes in the next two years.

Hundreds of thousands of Bank of America customers haven’t made a mortgage payment in more than a year. And more than a million others are at least two months behind in their payments.

Only a small fraction of Bank of America customers have had their mortgages modified to make payments more affordable.

Small Business Administration loans to businesses in New Hampshire increased by 91 percent in the first two quarters of fiscal year 2010, the agency reported.

According to the SBA, in the first six months of the fiscal year, 387 SBA loans totaling more than $69.8 million were approved, compared with 203 loans totaling $27.6 million in the first six months of fiscal year 2009.

“The data demonstrates that our SBA lenders throughout the state are actively looking for opportunities to lend to qualified small business owners,” said Witmer Jones, the SBA’s district director.

Demand for home loans continued to wane in February, even before the two latest interest rate increases, data released on Monday shows.

Just 50,287 mortgages were granted to owner-occupiers in February, down by a seasonally-adjusted 1.8 per cent compared to January, the fifth consecutive month of decline, Australian Bureau of Statistics data shows.

Economists’ forecasts had centred on 1.0 per cent fall in February home loan commitments.

Last year’s three interest rate rises and an end to the federal government’s more generous first homebuyer grant at the end of 2009 were blamed for the steady drop-off in mortgage demand.

Rates for 30-year home loans surged last week, rising to the highest level in eight months due to the improving economy and the end of a government push to keep rates low.

The average rate on a 30-year fixed rate mortgage was 5.21 percent this week, up from 5.08 percent a week earlier, Freddie Mac said Thursday. That’s the highest since mid-August, when the average rate was 5.29 percent.

Rates had dropped to a record low of 4.71 percent in December, pushed down by a campaign by the Federal Reserve to reduce borrowing costs for consumers. The program ended last week, but the Fed left the door open to reviving the program if the economy weakens.

The rate at which households and businesses defaulted on loans has been lower than expected in the first three months of this year, according to the Bank of England.

The Bank’s credit conditions survey for the first quarter of 2010 found that lenders reported that defaults on unsecured lending to households had fallen markedly over the past three months and by more than had been expected. Moreover, lenders expect that trend to continue over the coming three months.

But losses given default – the amount of loss a bank sustains each time a person defaults – had risen over the past three months and that trend, too, is expected to continue.