Design 21: Social Design Network

The refinancing boom may be cooling down, but the move to shorter mortgages —-- especially 10-year loans among pre-retirees — -- appears to be accelerating.

Some community banks say 10-year mortgages, once an insignificant niche option, are now accounting for increasingly large chunks of their business. For example, Rockville Bank in South Windsor, Conn., reports that 10-year loans represented a surprising one-fifth of its total residential mortgage originations in dollar terms last year.

Plus in a new survey released last week, Freddie Mac, the giant federal mortgage investor, found that 28 percent of all refinancings in the first quarter of 2013 involved shortening of terms. Among refinancingers with 30-year mortgages, nearly one-third switched to shorter-term replacement loans.

Though 15-year mortgages have been popular for years among homeowners who want to pay off their balances quickly, lenders say the 10-year loan —-- targeted directly at the demographic tsunami of baby boomers who are still employed but planning to retire in the coming decade —-- is on the upswing. “There’s a lot of interest in this ⅛10-year⅜ product,” said Victoria Stumpf, a loan officer with Third Federal Savings and Loan in Cleveland.

Why the growing attraction to going short? Start with interest rates. With an almost-certain increase in rates on the horizon as the Federal Reserve begins to “taper” its purchases of mortgage bonds and Treasury securities, fixed rates on 10-year...

Koreas largest bank Kookmin has had 3,000 cases of document manipulation in applications for collective loans for intermediate payment. The bank said five people recently filed a petition to police after suffering losses from manipulation of related documents by bank staff, and has launched an investigation into similar cases. According to the Financial Supervisory Service and the bank, Kookmin probed between the end of last month and Aug. 10 manipulation cases on 200,000 collective loans for intermediate payment on 850 reconstruction and redevelopment apartment sites, and discovered more than 3,000 fraud cases. According to the banks findings, most cases involved employee manipulation of the expiration date of collective loans for intermediate payment. In the past, three years of maturity have typically been written for collective loans for intermediate payment regardless of when the borrower would move to the house. If the banks headquarters reduced the time to 26 or 27 months, however, bank employees would scrape out the number and put in three years again. If the lending period is shorter than the date written in the contract, the borrower would be pressured for repayment. Collective loans for intermediate payment are shifted to lending with home collateral. So a person can move into a house before the lending maturity expires, but failure to move in within the time frame would mean he or she must make the intermediate payment because it is not shifted to a home equity lo...