European Stars and Stripes (Newspaper) - September 21, 1991, Darmstadt, Hesse Saturday september 21, 1991 the stars and stripes a Page 19_ Money matter late on your mortgage Call your Lender by the los Angeles times an estimated 2.4 million homeowners Are behind in their monthly mortgage payments the highest level of delinquencies in nearly five years. And with the housing Market weak and the country still mired in recession that number is expected to grow in the months ahead. If you Are one of the millions of borrowers who have fallen behind on their mortgage you probably do not have to worry much about actually losing your Home through foreclosure. However experts advise homeowners to Contact their lenders now to explain their financial woes and devise a plan to solve them. A the first Call you make should be to your Lender a said Jaimie Ogden an official with the Federal Home loan mortgage corp. The mortgage Bankers association of America reported this month that about 5.3 percent of the 45 million residential mortgages in Force Are delinquent by at least 30 Days. That a the highest a late rate since 1986. Yet if traditional patterns hold Only about one of every 20 of those borrowers will actually lose a Home to foreclosure. The others will be Able to save their Homes by getting emergency Relief from their lenders finding some other Way to pay their Bills or simply Selling their houses before lenders can Complete the foreclosure process. Lenders do not like to kick their customers out on the Street largely because its a costly and time consuming process and is bad for Public relations. By the los Angeles times for millions of people who rely on their Bank or savings and loan interest to live october brings the annual Day of reckoning a when savers must decide whether to Roll Over certificates of Deposit they opened a year earlier. This year the reckoning will be More painful than Ever before for Many savers. The Broad decline in interest rates Over the past 12 months has pulled cd yields Down to their lowest Levels since the 1970s. For people who survive on their interest earnings this is a Nightmare come True. Indeed the Shock of cd yields of less than 6 percent is Likely to spark a flurry of activity on the part of both savers and financial institutions. More people May flee cd accounts in favor of Bonds or stocks joining other investors who have poured billions of dollars into those riskier investments this year in search of higher returns. Banks and savings and loan institutions will have to placate their angry and confused customers with new product suggestions promotional giveaways or better service. October historically has been a big month for cd rollovers because the Federal government deregulated All cd yields in october 1983. Many savers took out six month or one year cd then and have simply rolled them Over repeatedly Ever since. That was profitable enough in the 1980s, when cd yields were mostly above 7.5 percent. Even a year ago the National average yield of a one year cd was 7.85 percent according to Bank rate Monitor a North Palm Beach fla., newsletter that tracks interest rates. Today however the National average yield on a one year cd is a Mere 5.76 percent a 2 percentage Point by the new York times Washington to answer inc., a new firm that specializes in interactive television technology and Hughes network systems plan to build a nationwide network that would allow television viewers to buy goods and services through a device attached to their sets. To answer of Reston va., has developed a two Way radio technology that allows television viewers to order goods and services through the communications device. The device sends data Over the air to a company that processes the orders and relays them to the businesses Troni which goods and services Are being purchased. The system was designed to work in conjunction with advertising and programs on regular television channels. However it could provide other services As Well lenders a Don t want you to lose your Home any More than you do a Jaimie Ogden Federal official still the importance of talking with your Lender when you first run into financial problems can to be overstated. Lenders can offer help in a variety of ways. If you Are simply Short a few Hundred dollars each month and expect to be Back on your feet soon the Lender might agree to temporarily lower your interest rate to solve your Cash flow problem. Or it might restructure your debt so you can pay it Back Over a longer period of time thus reducing the size of your monthly mortgage Tab. If the Outlook for improving your financial situation is Bleak a or if the Lender wants to play hardball a you might want to visit a different Lender who specializes in making Loans based on the equity you have in your Home. Lenders who specialize in equity Loans slide May not seem All that significant to some investors but to elderly people dependent on interest income it can be a crushing blow. A retired Saver who put $200,000 into a one year cd last september at 7.85 percent earned $15,700 in interest Over the past year. But at the current average yield of 5.76 percent that $200,000 nest egg will earn just $11,520 in interest Over the next year a a 27 percent drop in income to the Saver. The answer for Many older people who have depended on cd interest All these years is to look for better returns elsewhere a even though that Means giving up the Security of the Federal insurance covering Bank and a amp a deposits. The total amount held in cd at Banks and a amp is nationwide already has fallen $56 billion since february. Meanwhile More than $6 billion a month has been flowing into Bond Mutual funds which Pool investors dollars to buy . Treasury corporate municipal or mortgage backed Bonds. Yields on Bond funds Range from 6 percent to 8.5 percent and More. Unlike a cd however the principal value of a Bond fund Isnit guaranteed. You can lose Money Over time if the Bonds default or if Market interest rates Rise so that your older Bonds Are Worth less. Despite the enticing yields that Bonds offer Banks and a amp is Are confident that the majority of their customers can to afford the risks inherent in Bonds. Even if cd yields fall further most Bankers done to see a tidal wave of Money leaving cd. A a lot of our customers Are at the stage in life where they done to have time to earn a nest egg again should they lose it said Dick Kremer senior vice president at coast Federal Bank in los Angeles. From banking to Stock and sports information. The new agreement will link individual markets to a nationwide network. Hughes network systems a unit of general motors corp., will build a satellite communications Center for to answer in Reston. Transactions from individuals would be relayed by satellite to Reston where orders would be placed to companies around the country. In january after to answer tested its system for More than a year in Virginia the Federal communications commission proposed setting aside a local radio Channel for such new television services. But the acc is not expected to begin approving licenses until sometime next year and there is no requirement that a provider of two Way television services use to answers technology. Usually have More flexibility than conventional lenders. For example they might be Able to a Ive you a loan that wont require any payments for six months or a year or perhaps give you enough Cash to stave off foreclosure until your financial situation improves. Unfortunately this flexibility can be costly. Equity lenders often charge unusually High rates and their setup fees can be five 10 or even 15 times greater than the fees a conventional Lender would charge. If you done to want to pay those High fees you still have a handful of options remaining. A make a list of All your assets and consider Selling them to raise Cash. This includes stocks Bonds collectibles even a car or boat. You might be Able to borrow against the Cash value of your like insurance policy or retirement account at an attractive interest rate. A financial planner or accountant would have even More ideas. A consider renting a room. A also think of turning your Home into a rental property. You could move to cheaper quarters and rent your current Home out to a new family. A remember that the . Department of housing and Urban development maintains a list of Hud approved counselling agencies that provide their services free. One More note if you have studied All your options and just cannot figure out a Way to keep your Nom your Best bet will probably be to sell the House before the actual foreclosure Sale takes doldrums inject some sense into homeowners new York apr one positive consequence of weakness in housing markets Over the past few years has been a return to common sense on the part of buyers and Sellers. Common sense Tys a single family Home is for living rather than inv Sling but that seemingly obvious truth had been distorted in Many geographic areas where prices escalated far beyond the general inflation rate. In parts of the Northeast for example houses literally doubled in Price within a few years and homeowners tended to talk not about the qualities of their Homes but the potential for making a killing in the marketplace. The House became equated with a liquid asset one that might be cashed in and the proceeds used to move to a More impressive property. The House became an icon of wealth a proof of Success As two cars were in the 1960s. When Market values slowed after the mid-1980s, it seemed for a while that families would recapture the spirit of the House As a Home. But then came Home equity Loans that in effect turned the House into a borrowing machine. With As Little trouble As you might encounter in applying for Check cashing privileges at the local grocery store families obtained lines of credit on the inflated value of their houses. It was like banking at Home. It was hard for Many households to resist viewing their houses As liquid assets to be used on a whim rather than places in which to reside put Down roots raise families and consider spending the rest of their lives. It took harsh experience in the marketplace mainly the inability to sell and falling prices to restore the old priorities a that a House is a Home and Only secondly an investment. Dropping the investment aspect to second place does not however mean that it Isnit a worthwhile investment. It is hard to dispute the investment value especially since the investor buys on credit and lives in the investment. While buying on credit the Homeowner earns 100 percent of the appreciation in value if there is any. That is while putting up 25 percent of the Price to buy the owner receives All of any increase in value the Lender none. Plunge in cd rates will Hurt those living on interest income device to allow direct orders via to
