YOUR MORTGAGE : Here’s How to Track ARMs, Foreclosure Facts : Research: Answers to some of the most frequently asked real estate questions are as close as local banks and newspapers.
Questions about adjustable-rate mortgages, the 11th District Cost of Funds Index and investing in foreclosure property recently arrived in the mail.
Bob Townsend of Laguna Beach wrote that he has an adjustable-rate mortgage, but he thinks that his lender has been miscalculating his interest rate for several years.
“Are there any companies that can double-check the accuracy of my lender’s adjustments?” Townsend asked.
Firms that specialize in verifying the precision of changes to a borrower’s ARM are hard to find. One of the biggest is Loantech, which, for $49, will use its computers to determine whether your lender has been charging you the proper rate for as long as you’ve had your mortgage.
The company will also calculate the monthly payment you should be making and ensures that the loan balance at the end of each of your previous adjustment periods was correct. Loantech’s toll-free number is (800) 888-6781.
If you’re willing to do a little legwork, you can save some money by checking the adjustments yourself with the help of HSH Associates’ new ARM Check Kit.
The package includes a history of common index values that lenders use to make rate changes, worksheets and instructions on how to confirm a lender’s calculations. It costs $3 and is available from HSH, Department ACK, 1200 Route 23, Butler, N.J. 07405.
Like 6 million other Americans, Jaclyn Chng of Monterey Park has an ARM that rises and falls based on changes in the 11th District Cost of Funds. Her question is easy to answer: “Can you tell me where to look up this index?”
Probably the simplest way to find out where the index stands is to look it up in your local newspaper. The Times publishes the index every Saturday on Page 3 of its Business section under the heading “Key Rates.”
The Wall Street Journal publishes the rate on Monday in its Money and Investing section, under the heading “ARM Indexes.” USA Today prints it Tuesday through Friday on Page 3 of its Money section, under “Money Rates.”
If you don’t mind a long-distance charge, you can get the latest rate by calling the Federal Home Loan Bank of San Francisco’s prerecorded Index Rate Hotline at (415) 616-2600.
It seems as if everyone has seen those late-night television shows or newspaper ads touting the alleged fortunes to be made by investing in foreclosed property. The pitch is alluring: With some hard work, you can buy a “distressed” property with little or no money down, and perhaps even get cut-rate financing to boot.
Foreclosure properties are often called “repos” because they’ve been repossessed by the lender, or “REOs” because they’re listed under the “Real Estate Owned” section of a lending institution’s financial reports.
“How would I go about getting a list of . . . ‘repos’?” asks Cecil Elrod of Avenal.
Fortunately, you don’t have to enroll in an expensive weekend course or buy some pricey cassette tapes just to learn where you can find foreclosures: All it takes is the price of a phone call or 25 cents for a newspaper.
The simplest--but most time-consuming--way to find foreclosures is to call local lending institutions. Ask for the person who handles the foreclosure or REO department and see if he or she can send you a list of the foreclosed property the institution has for sale.
Another way is to check the Yellow Pages and call local brokers to find a company that publishes a list of foreclosed properties for sale by lenders.
In Southern California, for example, a Studio City-based company called the REO Realty Register sells a book that features more than 500 distressed properties offered by hundreds of lenders. It’s updated monthly and sells for $75 a copy or $600 a year.
The Register’s phone number is (818) 547-4290.
The Resolution Trust Corp., a federal agency that’s in charge of selling all the distressed property owned by failed savings and loan associations, has about 50,000 properties for sale across the nation.
Most of the RTC’s properties are in economically depressed areas: Only about 1,000 are on the West Coast, which has fared better than most other regions over the past several years.
The RTC charges about $100 for a complete directory of the properties it has for sale, but you can get a “screened” list of properties in a specific area for about 10 cents per address (although you’ll be charged a $5 minimum). To order a list, call (800) 431-0600.
The U.S. Department of Housing and Urban Development has thousands of foreclosures across the nation. Most were originally purchased with the help of the Federal Housing Administration, and many of the properties are in good areas.
HUD advertises the foreclosed properties it has for sale in newspapers, including The Times’ Sunday classified advertising section. The ads list the address of each property, a brief description and a minimum allowable bid.
Prospective buyers must usually submit sealed bids through a real estate agent. About a week after the advertisement appears, the bids are opened and the buyer who offered HUD the best deal gets the property.
Generally, only licensed real estate agents can get on HUD’s foreclosure mailing list. Non-licensees must watch for ads or work with a realtor who receives the list. You can find these agents by calling local realty firms.
The Veterans Administration can be another good source of foreclosure bargains. It usually sells its homes by listing them through local brokers, but sometimes it sells them on an auction basis.
You can find out how VA sales are conducted in your particular area by calling local realtors or by contacting the VA’s regional office.
