The United States Senate Bill 170 known as the “Helping Responsible Homeowners Act” was recently introduced by Democrat Sen. Barbara Boxer and co-sponsored by Sen. Johnny Isakson, a Republican from Georgia, making it a bipartisan effort to benefit homeowners and the economy at the same time. When and if the bill goes into effect it has the potential to help millions of U.S. homeowners with non-delinquent home loans to benefit by refinancing their mortgages at historically low interest rates.

The workings of S.B. 170 were designed to assist non-delinquent borrowers in refinancing their existing Fannie Mae or Freddie Mac home mortgage by banning high, risk-based lender fees currently in use. The new bill also requires lending banks to offer low interest refinance rates to those homeowners whose loans exceeds the value of their homes, an all-too-common scenario in today’s recessionary housing market.

Many homeowners are currently finding it difficult or impossible to refinance their existing residential or manufactured (mobile) home loans because of the risk-based lender fees. This can be especially important to owners of manufactured homes who are shopping for low interest refinance rates because many manufactured homes will not qualify for a low-interest loan if they are not permanently attached to the land they sit on. If homeowners can refinance their existing loans at lower interest rates their monthly payments would go down and help to reduce the effect of declining home values. The effect of removing the high lender fees that can be as high as 2% of the loan amount could make refinancing a realistic and affordable proposition for millions of Americans again.

More information on S.B. 170 can be obtained by contacting Sen. Boxer at 112 Hart Senate Office Bldg., Washington, D.C., 20510. Telephone: 951-684-4849.

According to data published in the recent Freddie Mac Quarterly Product Transition Report, 37% of American homeowners who refinanced their mortgages in the second quarter of the year chose a 15- or 20-year loan to replace their 30-year fixed-rate obligation. The number represents the largest group of people to choose loans of less-than-30-years since the third quarter of 2003, a time when the U.S. housing boom was just getting started.

Frank Nothaft, Freddie Mac’s vice president and chief economist, stated in a press release that “Compared to a 30-year fixed-rate mortgage, the interest rate on 15-year fixed was about 0.8 percentage points lower during the second quarter. For borrowers motivated to refinance by low fixed-rates, they could obtain even lower rates by shortening their term.” The Freddie Mac report also showed that fixed-rate loans accounted for 95% of refinanced loans during the same quarter.

There are several reasons the long-term loans might have lost much of their attraction, one being that the current lowest interest rates on record may have encouraged more people to reduce the lengths of their loan terms. It is also believed that some people may not be happy about having a mortgage over their heads for a full three decades. Others may believe they will want to sell their homes in less than 30 years and are wondering why they would want to sell their homes with a mortgage when they could eventually sell them at a higher price and more easily it they were free and clear of encumbrances.

The move towards shorter mortgage terms would also allow homeowners with a new mortgage of 15-years to save thousands of dollars in interest over the course of the loan, however, the lien holder may also get much less of a tax deduction over the period they hold their loans. And finally, some people may be thinking that if they have little or no equity in their homes, a 30-year obligation is an unwise use of the few funds they do have. While many economists continue to speculate about the reason more people are choosing 15-year, 20-year, or 30-year mortgages, it is clear that the people who are choosing the shorter terms are those refinancing, not buying. The market data now clearly shows that most new loans originating today are not being used to purchase new homes at all.

Researchers at George Washington University recently released the latest edition of the “FHA Assessment Report: The Role and Reform of the Federal Housing Administration in a Recovering U. S. Housing Market” and the report shows that the current administration’s recent recommendations that the higher end of the FHA’s loan limits should be reduced would have nearly zero impact on its overall loan totals because the current loan limits are already higher than needed to serve the FHA’s main target demographic of first time and low to moderate income borrowers. The Assessment Report recommends that the Obama administration should probably make far more sweeping cuts as the FHA reduces its role as the nation’s lender of last resort.

The George Washington University study shows that if the maximum FHA loan limits were slashed in half the lender could still serve 95% of its traditional target market. The report also showed that while the FHA currently originates nearly 30% of all mortgage loans, the agency could still continue to serve its core target market if only 10 to 15% of the loan originations were handled by the FHA.

Dr. Robert Van Order, one of the report’s co-authors was quoted as saying “FHA’s expansion played a major role in keeping the housing market afloat during the economic collapse of 2008 and 2009. However, we now are left with large loan limits that were set when home prices at the top of the bubble. They don’t reflect current market conditions and are unlikely to assist the FHA in reaching its historical constituencies—first-time, minority and low-income homebuyers.” Noting that the current proposal would only affect three percent of all the loans the agency endorsed in 2010, Van Order believes it is clear that the FHA’s current market share exceeds what is actually needed to serve their target markets, and that the agency could easily make do if the loan limits were cut in half. Dr. Van Order added, “In the wake of significant declines in home prices, we believe the FHA could reduce its loan limits by approximately 50 percent and still almost entirely satisfy its target market. That would reduce its currently large market share, which is difficult for FHA to manage.”

The George Washington University study also made several real-world recommendations to the Obama Administration and Congress aimed at helping the FHA streamline operations including:

*Decrease the maximum loan amounts that qualify for FHA insurance by first letting the present increase in those limits to expire as scheduled on October 1, 2011, and then by reviewing the limits again in order to determine whether those limits should be decreased even more at a later date.

*The report’s authors also recommended increasing the price of FHA mortgage insurance by adding another 25 basis point increase in the annual mortgage insurance premium.

*In order to ensure the private market fills any opportunities created by reform, the FHA loan changes should also be coordinated with Fannie Mae and Freddie Mac.

*Reduce the FHA’s minimum loan limit from the current figure of $271,050 to $200,000.

*Reduce the maximum loan amount the FHA can insure from $729,750 to $363,000.

*Eliminate the 2008 median home price estimate and go back to the current area median home price when calculating the local loan maximum amounts.

*Halt the current policy that allows the FHA to guarantee loans up to 125% of the median home price in certain high-cost markets.

A new Senate bill is aimed at limiting how often Americans could borrow from their 401(k) plans. In a bipartisan effort, Sen. Herb Kohl (D-WI) and Sen. Mike Enzi (R-WY) announced the proposed legislation to help protect Americans’ retirement savings when account holders cannot repay the money they borrowed from their 401k accounts.

Many Americans have had to use their employee-sponsored 401k plans as defacto savings account funds but all too often are unable to repay the accounts, resulting in a $6 million disparity between what most Americans have actually saved and what they will eventually need for retirement. Recent annual studies have shown that nearly 30% of 401k participants have an outstanding loan and the average balance of the loan was above $7,500. Research also shows that over half of all 401k plans that were examined actually encouraged more account leakage because they permitted two or more loans against the same 410k at the same time. Sen. Kohl said in a prepared statement “The gap between what Americans will need in retirement and what they will actually have saved is estimated to be a staggering $6.6 trillion. While having access to a loan in an emergency is an important feature for many participants, a 401k savings account should not be used as a piggy bank.”

Kohl and Enzi’s bill is called the Savings Enhancement by Alleviating Leakage in 401k Savings Act of 2011, otherwise known as the SEAL Act. The SEAL Act would limit those 401k loan practices that provide access to retirement funds but also add costs and fees. The SEAL Act would also extend the rollover period for 401k plan loan amounts. It would allow 401k participants to continue to make elective contributions during the six months following a hardship withdrawal but it would also lower the overall number of loans that a participant could take at one time. The SEAL Act would put an end to dubious products like the 401k debit cards that encourage 401k drawdown.

One of the many negative aspects of the economic downturn and recession that began in 2008 was that many banks stopped making loans to small business owners. Fast forward to 2011 and with the recent, but slight indications of a general recovery on the way, the banks are once again ready to make new loans to their more credit-worthy customers, and that includes many small businesses. In fact, one large U.S. bank recently made the announcement that it would be greatly increasing the amount it will lend to American small businesses this year.

JPMorgan Chase & Co. has committed to lending $12 billion to American small businesses in 2011 alone, a number that represents a full 20 percent increase from its 2010 small business loan program commitment. Even though Chase was the leading Small Business Administration lender in the U.S. last year, and the bank said it exceeded its goal of lending $10 billion to small businesses last year, it has already upped its lending to small businesses by 64 percent in the first quarter of this year alone. The bank also said it recorded over 100,000 new loans for working capital, term loans for expansion, commercial mortgages, lines of credit and business credit cards in the first quarter as well.

In a press release, CEO of business banking in Chase retail financial services, Michael Cleary said “Small business owners are not only our neighbors, but also the entrepreneurs that hire half of the employees in the United States. It’s critical that we support small businesses as they continue to fuel the economic recovery across the country.” The Chase Bank also created $25 million in grants made available to Community Development Financial Institutions last year. Those institutions served previously hard-to-reach communities by investing capital in small business enterprises. The program also provided $150 million in grants to support community development, education and the arts in the same areas.

In addition to the news that Chase plans to boost loans to small-businesses by 20% this year, the bank will also pay $12 million to 6,000 active-duty U.S. service members and an additional $15 million will be paid out for individual damages related to claims of overcharging military personnel on their mortgage payments. Despite the fact that federal law caps interest rates on mortgages at 6% while military service members are on duty and it also forbids foreclosure proceedings until nine months after the service member returns from active duty, a federal investigation revealed that the bank had overcharged the mortgages of 6,000 active military personnel and 18 military homes were actually foreclosed on.

The head of Chase’s Home Lending program, Frank Bisignano, said “We hold ourselves accountable and responsible for these mistakes, and fixing them is just the beginning of a new way forward.” Since the mistake was uncovered, Chase has unveiled an enhanced military member loan modification program and joined with corporate employers to create new jobs and offer ongoing education and training to transitioning military personnel and veterans.

Is now the best moment to refinance your home? The rate for a thirty-year fixed rate mortgage has hit its lowest point since Freddie Mac began documenting rates in 1971. Five-year adjustable mortgage rates declined to their lowest point on record as well.

When interest rates dip below what many in the mortgage business ever imagined, it would seem natural to refinance a home mortgage loan. The second week of August has seen a slight increase in refinance applications.

If you have quite a bit of time left on your mortgage, refinancing might be a good bet. However, the early payoff penalties commonly found in mortgage agreements, especially sub-prime ones, may negate the value of refinancing.

If you decide to look into refinancing, examine loan fees carefully. Even with interest rates at record lows, closing costs may add so much to your principal that it isn’t worth refinancing. Ask potential lenders for good faith estimates (GFEs). A GFE explains estimated costs on a loan.

There comes a time in every student’s career where the student loans inevitably become due. At first it might seem overwhelming, but pay attention to these 3 sure-fire tips that make paying back your loans a bit easier:

1) Pay Interest When Available

Some student loans give you the option of paying interest once or twice a year before the loan even becomes due. Usually the interest rate is very low, so if you have a little extra cash it’s a great opportunity to knock a little bit off the total.

2) Don’t Rush To Repay Them

It might seem like an easy thing to do is to pay as much as possible, but slow down. The 3.5% interest rate on the loan is the best deal you’re going to find. In the end, it’s better to pay it off slowly than to back yourself into a hole financially.

3) Put Extra Away

If you’re sometimes struggling to make the minimum payments some months, then when you have extra money put it to the side for your loan payment. It’s always a good idea to have at least one month’s payment stored away extra just in case you run into a financial jam.

Understanding exactly what a cash loan is and how they can best be used is essential. Cash loans obtained from banks and payday loan sources are best used only for temporary emergency expenses like car repairs, medical services, check overdrafts or avoiding a late fees on credit bills. The main objective is to be able to quickly repay the short term loan and then to not need it again.

Using cash loans for routine expenses like gasoline, food and entertainment is much less desirable uses. These are things that should be part of a regular weekly budget. If you can not cover your basic expenses, you need to find more income, rather than take out high interest short term cash loans.

The need for any type of loan is a signal that you have a financial problem to overcome. Cash loans are easy to get, require no credit check, and can be come habit forming. They are a very expensive habit, however, and care should be taken to avoid getting trapped into taking out cash loans month after month.

Poor credit doesn’t necessarily disqualify you from obtaining a cash loan, but there are some things you need to keep in mind before committing to one of these cash loans. There are many payday loan lenders and car title loan lenders that will offer money for those in need, using either a bank draft or the vehicle title as collateral. While these loans have their certain dangers, there are many benefits as well.

Beware the pitfalls

With these loans, interest rates tend to be high and repayment options are limited. Expect to pay a seriously inflated APR and if you miss a payment, you can expect fees to compound. Those who continue to defer their loans or miss payments will get in a hole quickly and it’s one that will not be easy to dig out of.

Gauging the benefits

Though cash loans of this type are typically not a good idea as a long-term solution, they do have some benefits in the short term. These loans help those people who are closed out of the traditional financial market, as they don’t require credit checks. They can help individuals who find themselves in emergency situations.

Another benefit is that these loans come quickly and they come in the form of cash, so you won’t have to waste time cutting through red tape. Often times, the need for money is immediate, so people applying for loans don’t have weeks or months to go through a drawn out process. Just about anyone with a job and a bank account can qualify, making them highly accessible.

While many people are familiar with refinancing a home mortgage, many are unaware that it is also possible to refinance a car loan. Just as with refinancing a mortgage, as market conditions or your credit rating change, you may be able to get a new loan with better terms that will lower either your monthly payment or the length of your loan.

Depending on your situation, refinancing could result in a significant savings. A person who was told they couldn’t get a loan anywhere else may have signed up for a loan with a 21% interest rate. If this were a 60-month loan for $16,500, their payment would be $446 per month. If they are now able to refinance that loan at 7%, the new payment would be about $330 per month. Not only would this car buyer save $116 per month on their payment, they would also save almost $7000 in interest payments over the life of the loan.

Refinancing a car loan may be a wise move in the following circumstances:

• You currently have a loan with a high interest rate.
• Your credit score has improved significantly since you took out your original car loan.
• You have trouble making payments, and a lower payment would help you make your payments on time.

There are plenty of scams out there in the auto refinance market, so be aware of the following:

• Appraisals on car refinance loans are unnecessary. Avoid any lenders that want to charge you a fee to appraise your car.
• Don’t pay up-front fees.
• Don’t borrow more than your car’s current value.
• Be careful about extending the term of your loan.
• Verify the lender you’re working with through sources like the Better Business Bureau.
• If you’re close to paying off your current loan, it may not make sense to refinance.
• Find out if there are any fees for early pay-off of your current loan.

Even a modest change in interest rate could result in a monthly savings on your car payment and hundreds of dollars in interest savings over the life of your loan that could make refinancing a smart choice for you.