The reigning credit crunch has disturbed the financial equilibrium of many people around the globe. Aftermath of subprime mortgage crisis was felt the world over and the housing market is yet to recuperate fully. With such a situation prevailing, there are many who successfully manage to tap the equity in their homes. It has been made possible due to reduction in the mortgage rates.

Refinancing activities increased
Statistical data indicates that the fixed rate mortgage for a 30 year loan term dropped by 1.3 points from 6.46% to 5.14% during the period October 2008. The fixed rate mortgage rates for a 15 years loan term has also registered a sharp decline from 6.19% to 4.91%.

Reports also suggest that mortgage refinance escalated by 60% during the 2nd week of December 2008 (according to Mortgage Bankers Association). The increase in mortgage refinance activity could be traced as there were marked changes in the refinance index of Mortgage Bankers Association which keeps a track of all the refinance loan applications.

Mortgage refinance has gone down well with consumers who think they are being able to save a good deal by making lower mortgage payments. The amount that the consumers are saving is being spent mostly for building up an emergency fund or to save it for the rainy day.

Eligibility criteria for mortgage refinance are still stringent
Even though consumers are trying hard to utilize their property by opting for refinancing, not all are qualifying for the same. There are 2 reasons for this. The first reason is that the norms and requirements for qualifying for refinance have been made more stringent. The second reason is that the housing values have declined drastically.

Creditors are usually giving preference to borrowers having 20% equity in their property. However, a borrower can opt for private mortgage insurance in the event he has less than 20% equity in the property.

Refinance is a good option when there are several debts that need to be settled. It is better to opt for refinancing even if the rate available is 1% less than interest rate, the homeowner is currently paying. With the bursting of the housing bubble, lenders have become very cautious and tend to disqualify any loan application that appears to be a risky deal for them.

Wall Street may be left a little smaller after the dust from the credit crisis settles. But will its next incarnation be even more profitable?

Shakeups at Washington Mutual and Wachovia. Roundtable Discussion with Andrew Seibert of Nextier Wealth Management and Forbes CEO Steve Forbes.

Washington Mutual shares are down after Kerry Killinger stepped down as chairman. Shares of Wachovia are falling below it’s lowest value in almost 13 years after Ken Thompson was ousted.

Chairman Lanty Smith has been appointed interim CEO. Is this new management what these companies need to get back on track? Are there more troubles for financials?

I think their values will go lower until they get a feel for who will take over. There are probably more Writedowns to come.

These banks have not gone beyond the problem of the Subprime Mortgage Industry and there is possibly another shoe to fall.

If the Credit Deterioration continues, there will be many more problems.

Wachovia has big news today. Shares of falling in the premarket after the company ousted CEO Ken Thompson.

Wachovia stated he is stepping down at the request of the board, saying no single precipitating event calls because the board to reach the decision, but a series of previously disclosed disappointments and setbacks cumulatively have negatively impacted the company and performance. Perhaps you can call it an understatement.

Shares down 57% in the past 12 months.

Critics are blaming Alan Greenspan for today’s financial crisis, but now the former Federal Reserve chief is fighting back.

Greenspan sets the record straight in an exclusive interview.

Part 1

Part 2

What are others saying about Alan Greenspan

Alan Greenspan unfair blame for sub prime crisis…

The Stock Market Crash Of October, 1987

National City Closes Residential Wholesale Lending

National City will reduce its quarterly dividend by 49 percent and cut 900 more jobs as it stops making home loans through their wholesale division.

The lender has cut its staffing by 3,400 positions in the past year, including the reductions announced today, as the credit crunch worsens.

National City will continue making home loans through its own staff, the bank said. The housing market “requires aggressive steps to overcome the near-term challenges”, Chief Executive Peter Raskind said in a statement today.

“It is clear that origination volumes will be lower going forward”, it appears that the type of mortgages offered by National City are no longer desired on the secondary market.

Mortgage companies who offer Home Equity Lines of Credit or ’second mortgages’ find themselves in a particularly awkward position in todays market. Millions of homeowners that have a Home Equity Line of Credit have little or no equity left on their home, many are in depreciating markets and even more have taken out the stated income or as they are also known as, ‘liar loans’. What makes this awkward for lenders is the fact that in the event of a foreclosure, which could be in the range of 2 million in 2008, the primary mortgage holder is financially compensated first and “IF” there is any remaining money available it goes to the second mortgage holder. Often times the second mortgage holder receives little or no compensation.

National City will pay 21 cents a share on Feb. 1 to shareholders of record on Jan. 14, the Cleveland based bank said. The dividend was previously 41 cents a share.

Markets Get a Pick-Me-Up. 12//12 The Fed’s plan to ease the credit crunch was met favorably on Wall Street but there are still plenty of concerns.

Wholesale Mortgage Production Falls 57% at Countrywide Financial

Countrywide Financial funded just $3.2 billion in mortgages through loan brokers during October, a startling 57% decline from the level of a year earlier.

During the month its retail production fell by 29%, while loans bought through the correspondent channel declined 52%.

Countrywide funded $22 billion in October, a 48% drop from the level recorded a year earlier. Like most residential lenders, Countrywide has been hurt by the meltdown in the subprime and nonconforming niches and a credit crunch in the secondary market.

In a statement, Countrywide president David Sambol noted that 90% of the company’s production is now funded through its thrift affiliate.

Citi Up To $11 Billion Due To Additional Writedowns From Subprime Mortgages and CDO’s. Citigroup’s Prince Steps Down. CNBS Says Prince Alwaleed Wants Sandy Weill to Run Citigroup.