My Financial Healthcheck

The 3-Month Libor slipped to .0269% this past week, the lowest on record since 1986 when the British Banker’s Association started keeping records.  The same index was 4.8% a year ago.  The three-month libor is tied to the Federal Reserve’s benchmark interest rate, making it a barometer of the central bank’s monetary policy.  The big question is how long can or will rates stay this low.  Mortgage servicers  have picked up the pace of loan modifications this past month with 12% of those eligible have been put into trial loan programs.  Since the Obama Administration’s plan is to help over 4 million homeowners they are are not doing so well in reaching this goal.  Many borrowers are complaining that servicers are not responding to their calls and applications, losing their paperwork or not making decisions.  Despite the administration’s and servicers efforts, the housing market is still in trouble.  The number of people falling behind on their mortgage payments continues to mount, especially as unemployment rises.  A total of 76,134 homeowners lost their homes in August, that’s 12.7% fewer than in July. It’s a sign that banks are still delaying repossessions of these properties, banks are hoping that borrowers will self cure themselves and catch up without assistance, or that a short sale can be reached.  The states where foreclosures are still the worst is California, Florida, Nevada and Arizona.  The FDIC is pushing for banks to reduce mortgage payments for the unemployed or underemployed for at least six months.  The loan modification programs allow payments to be reduced to 31% of their pre-tax income if doing so would cost less than foreclosing on the home.