Don't Be a Victim of Loan Fraud

Protect Yourself from Predatory Lenders

Buying or refinancing your home may be one of the most important and complex financial decisions you'll ever make. Many lenders, appraisers, and real estate professionals stand ready to help you get a nice home and a great loan. However, you need to understand the home buying process to be a smart consumer. Every year, misinformed homebuyers, often first-time purchasers or seniors, become victims of predatory lending or loan fraud.

Don't let this happen to you!

11 Tips on Being a Smart Consumer

• Before you buy a home, attend a homeownership education course offered by the U.S. Department of Housing and Urban Development (HUD)-approved, non-profit counseling agencies.
• Interview several real estate professionals (agents), and ask for and check references before you select one to help you buy or sell a home.
• Get information about the prices of other homes in the neighborhood. Don't be fooled into paying too much.
• Hire a properly qualified and licensed home inspector to carefully inspect the property before you are obligated to buy. Determine whether you or the seller is going to be responsible for paying for the repairs. If you have to pay for the repairs, determine whether or not you can afford to make them.
• Shop for a lender and compare costs. Be suspicious if anyone tries to steer you to just one lender.
• Do NOT let anyone persuade you to make a false statement on your loan application, such as overstating your income, the source of your down payment, failing to disclose the nature and amount of your debts, or even how long you have been employed. When you apply for a mortgage loan, every piece of information that you submit must be accurate and complete. Lying on a mortgage application is fraud and may result in criminal penalties.
• Do NOT let anyone convince you to borrow more money than you know you can afford to repay. If you get behind on your payments, you risk losing your house and all of the money you put into your property.
• Never sign a blank document or a document containing blanks. If information is inserted by someone else after you have signed, you may still be bound to the terms of the contract. Insert "N/A" (i.e., not applicable) or cross through any blanks.
• Read everything carefully and ask questions. Do not sign anything that you don't understand. Before signing, have your contract and loan agreement reviewed by an attorney skilled in real estate law, consult with a trusted real estate professional or ask for help from a housing counselor with a HUD-approved agency. If you cannot afford an attorney, take your documents to the HUD-approved housing counseling agency near you to find out if they will review the documents or can refer you to an attorney who will help you for free or at low cost.
• Be suspicious when the cost of a home improvement goes up if you don't accept the contractor's financing.
• Be honest about your intention to occupy the house. Stating that you plan to live there when, in fact, you are not (because you intend to rent the house to someone else or fix it up and resell it) violates federal law and is a crime.

What is Predatory Lending?

In communities across America, people are losing their homes and their investments because of predatory lenders, appraisers, mortgage brokers and home improvement contractors who:

• Sell properties for much more than they are worth using false appraisals.
• Encourage borrowers to lie about their income, expenses, or cash available for down payments in order to get a loan.
• Knowingly lend more money than a borrower can afford to repay.
• Charge high interest rates to borrowers based on their race or national origin and not on their credit history.
• Charge fees for unnecessary or nonexistent products and services.
• Pressure borrowers to accept higher-risk loans such as balloon loans, interest only payments, and steep pre-payment penalties.
• Target vulnerable borrowers to cash-out refinances offers when they know borrowers are in need of cash due to medical, unemployment or debt problems.
• "Strip" homeowners' equity from their homes by convincing them to refinance again and again when there is no benefit to the borrower.
• Use high pressure sales tactics to sell home improvements and then finance them at high interest rates.

What Tactics Do Predators Use?

• A lender or investor tells you that they are your only chance of getting a loan or owning a home. You should be able to take your time to shop around and compare prices and houses.
• The house you are buying costs a lot more than other homes in the neighborhood, but isn't any bigger or better.
• You are asked to sign a sales contract or loan documents that are blank or that contain information which is not true.
• You are told that the Federal Housing Administration insurance protects you against property defects or loan fraud - it does not.
• The cost or loan terms at closing are not what you agreed to.
• You are told that refinancing can solve your credit or money problems.
• You are told that you can only get a good deal on a home improvement if you finance it with a particular lender.

Remember:

If a deal to buy, repair or refinance a house sounds too good to be true, it usually is! To find a counselor near you, visit http://newscenter.springhillgrouphome.com for more details.

Bank of England pulls back on support for home loans

source: http://newscenter.springhillgrouphome.com/2013/12/bank-england-pulls-back-support-home-loans/

The Bank of England plans to cut its support for mortgage lending in the U.K. and nudge banks towards lending more to small businesses, it said Thursday, November 28.

The move is an answer to increasing concern that a speedy pickup in housing market activity in Britain could ultimately turn unpleasant, affecting banks and borrowers, and also as longstanding worries that small firms are being starved of credit, hindering economic recovery.

What’s more, it is a sample of the growing willingness of central banks across the globe to organize customized policies to maneuver their economies, rather than relying exclusively on official interest.

The BOE said in its twice-yearly financial stability report that although there is little evidence that quickening activity in Britain’s housing market poses an immediate threat to financial stability, “risks may grow if stronger activity is accompanied by further substantial and rapid increases in house prices and a further buildup in household indebtedness.”

The central bank said property has played “a central role” in many previous economic and financial crises. In the U.K., real estate accounts for 70% of non-financial assets.

House prices in the U.K. have climbed speedily in past months, formed worries over the materialization of a new bubble in prices. A government mortgage-support program for would-be homebuyers called Help-to-Buy had pave the way for a boost in mortgage lending, together with an increase in the number of riskier loans on offer that entail merely a small down payment.

The BOE said that in response to the pickup in housing-market activity and an ongoing dearth in small-business lending it has decided to overhaul its flagship Funding-for-Lending Scheme, or FLS, which offers banks cheap cash provided they use it to dish out loans to households and businesses.

Banks drawing on the FLS will from January no longer benefit from reduced capital requirements on new mortgage loans, the BOE said. On the other hand, capital relief will carry on for small business loans. Banks engaged in small business lending will also pay a smaller flat-rate fee of just 0.25% to use the FLS and will be able to draw more cash from the facility, the BOE added.

The changes were settled with Chancellor of the Exchequer George Osborne.

“Now the housing market is starting to pick up, it is right that we focus the scheme’s firepower on small businesses,” Osborne said. BOE Gov. Mark Carney said extra support for mortgage lending is “no longer needed.”

New Mortgage Disclosure Forms to Roll Out In August 2015

 

The shorter forms, set to be adopted by the Consumer Financial Protection Bureau, will demonstrate buyers more evidently the terms and cost of a home loan.

http://springhillgrouphome.com/2013/12/new-mortgage-disclosure-forms-to-roll-out-in-august-2015/

The federal government’s consumer financial watchdog will necessitate lenders to issue shorter, easier-to-understand mortgage disclosure forms to home buyers that more noticeably show the costs and terms of the loans.

The Consumer Financial Protection Bureau plans to issue the rule Wednesday, November 20, subsequent through on what was an initiative launched in 2011 as the then-fledgling agency’s first major action.  

The early Know Before You Owe forms were welcomed by consumer and industry groups as a development more than the more intricate disclosures essential under federal law for more than 30 years.  The bureau said the new forms would make it easier for home buyers to compare loan offers.

“Taking out a mortgage is one of the biggest financial decisions a consumer will ever make,” said Richard Cordray, the bureau’s director. “Our new Know Before You Owe mortgage forms improve consumerunderstanding, aid comparison shopping and help prevent closing … surprises for consumers.”

Lenders will be mandated to use the new forms, available in English and Spanish, starting Aug. 1, 2015.

The forms will be given to potential home buyers when they apply for a mortgage and when they close on the loan. They will make available the detailed information like the estimated monthly principal and interest payments, closing costs and any prepayment penalties or balloon payments.

The latest loan estimate form and the closing disclosure form use large and bold type for important information like the interest rate and feature highlighted headings and terms to make them easier to read.

Lenders will be obliged to provide the new closing disclosure form to home buyers three days before the closing.  That would give borrowers time to read and understand the information before the loan closes.  Lenders will not be allowed to change the fees and costs on the form at the closing “unless there is a legitimate reason,” under the bureau’s new rule.  

The bureau assembled public and industry feedback on the forms after introducing them in May 2011.  Testing showed that consumers using the new forms were better able to answer questions about a proposed loan and know whether they would be able to afford it, the bureau said.  

HUD Says It’s Unclear If FHA Can Back Loans Issued after Seizure

http://springhillgrouphome.com/2013/10/hud-says-its-unclear-if-fha-can-back-loans-issued-after-seizure/

The U.S. Department of Housing and Urban Development made mention to thelawmakers it couldn’t pronounce if the Federal Housing Administration would cover new mortgages in communities together with Richmond, California that propose to seize home loans through eminent domain.“Pending legal developments and possible further execution of the plans in question, HUD does not know whether any new mortgages which might be created would qualify for insurance by the Federal Housing Administration,” Acting Assistant Secretary Elliot Mincberg wrote in an Aug. 12 letter responding to questions from members of Congress.

The week following the FHFA HUD’s comments came, which oversees Fannie Mae (FNMA) and Freddie Mac, said it would considering directing the companies to stop doing business in communities that seize mortgages through eminent domain to avert foreclosure by writing down the principal balances.

The Federal Housing Finance Agency may also initiate legal challenges to such actions, Alfred M. Pollard, the agency’s general counsel, said in a memorandum.

“There is a rational basis to conclude that the use of eminent domain by localities to restructure loans for borrowers that are ‘underwater’ on their mortgages presents a clear threat to the safe and sound operations of Fannie Mae, Freddie Mac and the Federal Home Loan Banks as provided in federal law,” Pollard wrote.

Blight Prevention

In the preceding month, Richmond announced it is moving ahead with a plan to seize mortgages. The public benefit of the seizures is to fend off foreclosures that cause blight and create other costs for the community, according to the plan’s supporters.

At the minimum of a dozen cities still dealing with the fallout of most horrible slump in home prices from the time when the Great Depression are studying the eminent domain idea. Others include El Monte, California, North Las Vegas, Nevada, and Irvington, New Jersey. Communities such as San Bernardino County, California, and Chicago abandoned such plans after considering them last year.

Last week, Fannie Mae and Freddie Mac joined investors authorizing a lawsuit to stop Richmond from seizing loans.

The distinguished domain program is advocated by Mortgage Resolution Partners LLC, which would supply services and arrange for private investment funds that would proceed by buying the loans for less than property values, and reworking them.

Housing Counselors Warn Foreclosure Rescue Scams Still Common

It was agreed by nonprofit housing counseling agencies and housing rights advocates that foreclosure rescue scams are still common in the Bay Area, and there’s no need for homeowners in distress to empty their pockets paying for private attorneys.

Because of the sudden death of the family’s primary breadwinner, Tatakamotongas of East Palo Alto suffered from mortgage payments. They decided to seek help with obtaining a loan modification to lower their monthly payments and due to this they came into contact with a scammer rather than legal help.

“The advice they gave me was ‘Don’t make any more payments at all. The longer you are backed up, the more we can help you.’ And so of course I believed them,” says Mele Tatakamotonga.

The scammer was a private attorney. He told them to stop paying their mortgage so that they will qualify for a modification and charged them $3,000 for the assistance.

But as expected from a scammer, after paying the fee the phone number had been disconnected.
“Foreclosure rescue and mortgage modification scams are continuing and getting bolder,” says Vanitha Venugopal, program director of Community Development and Investment at The San Francisco Foundation.
Homeowners must pay for help with loan modifications and other housing issues because scams continue to be rampant, advocates say.

The Tatakamotongas finally found Community Legal Services in East Palo Alto, a nonprofit law office, which collected the family’s money from the dishonest attorney, and assisted them with obtaining a loan modification.

Maeve Elise Brown, Executive Director of Housing and Economic Rights Advocates (HERA) in Oakland, another organization that offers free legal aid, warns that scams are commonly carried out by unscrupulous attorneys.
Brown also says that the media needs to be wary of running scammers’ advertisements.
Many homeowners looking for help contact scammers that they find through television and radio ads.
According to Leah Simon-Weisberg, the legal director of Tenants Together, about 40 percent of the occupants of foreclosed properties are tenants. Tenants can also get free help from nonprofit legal aid offices.


Advocates agree that homeowners looking for help should know the following:

1. Don’t trust people who want you to pay them for help in obtaining a loan modification, or for other housing counseling services. Beware particularly of attorneys charging for these services.
2. Don’t trust people who tell you to stop making your mortgage payments in order to qualify for a loan modification.
3. Don’t submit mortgage payments to anyone other than your servicer without your servicer’s direct consent.
4. Don’t sign over your property deed to anyone unless your servicer is directly involved in the process. If you don’t understand what someone is asking you to sign.
  source: http://springhillgrouphome.com/2013/09/housing-counselors-warn-foreclosure-rescue-scams-still-common/

National Association of Realtors®: Some Areas Now Seeing Sellers' Markets

http://newscenter.springhillgrouphome.com/2013/05/national-association-of-realtors-some-areas-now-seeing-sellers-markets/

 The National Association of Realtors® (NAR) said today that home affordability remains high despite rising home prices in U.S. metropolitan areas in the first quarter. The annual price increase posted in Quarter One was the greatest in over seven years but NAR figures demonstrates that the typical buyer receives almost twice the income required to purchase a median priced home in his or her area.

Weigh against $158,600 to the previous year the median price of an existing single-family home rose to $176,600 in the first quarter. An 11.3 percent leap is the greatest raise since Q4 2005 when the increase back then was 13.6 percent. Out of the 140 metropolitan statistical areas (MSA) followed by NAR 133 demonstrated a yearly increase in median prices; the alike number which illustrated a twelve-monthly increase in Q4 but almost twice the number, 74, with such a year-over-year development in the first quarter of 2012.

NAR said that some of the price increase reflected a shrinking market share of lower priced homes and distressed sales and greater activity in the higher price ranges. There was a 23 percent share of distressed sales of the market in the first quarter compared to the 32 percent share in the previous year.

Median prices of condo and condominium prices located in urban areas ascend 4 percent on a yearly basis in the first quarter to $172,400. Thirty-nine metros out of the 54 tracked by NAR showed increases in their median condo price from a year ago while 15 areas had declines.

Lawrence Yun, NAR chief economist, said many areas are experiencing a seller's market. "The supply/demand balance is clearly tilted toward sellers in a good portion of the country," he said. "Inventory conditions are expected to remain fairly constrained this year, so overall price increases should be well above the historic gain of one-to-two percentage points above the rate of inflation. If home builders can continue to ramp up production, then home price growth is expected to moderate in 2014."

The highest since the fourth quarter of 2009 when homebuyer tax credits were in place is the total existing-home sales including single-family and condos rose 0.8 percent to a seasonally adjusted annual rate of 4.94 million in the first quarter. The rate was a boost of 4 percent starting the fourth quarter pace of 4.90 million and 9.8 percent higher compare to the year earlier.

NAR said that to qualify to purchase a home at the national median price during the first quarter a borrower with a 20 percent downpayment would need an income of $30,700. With only a five percent downpayment the qualifying income would be $36,500. The national median income was $62,200.

After the first quarter there were 1.93 million homes available for sale. It is 16.8 percent below the close of the initial quarter of 2012, when 2.32 million homes were on the market.

In the first quarter, existing-home sales in the Northeast rose 4.4 percent furthermore, are 9.1 percent above the first quarter of 2012. In the first quarter from a year ago, the median existing single-family home price in the Northeast rose 2.9 percent to $234,000.

Existing-home sales increased 1.2 percent in the first quarter and are 15.0 percent higher than a year ago in the Midwest. In the first quarter from the same quarter last year, the median existing single-family home price in the Midwest increased 8.2 percent to $135,10.

In the South edged, existing-home sales up 0.7 percent in the first quarter and comparing to the first quarter of 2012 with just 13.3 percent above. The regional median existing single-family home price was $156,800 in the first quarter, up 9.3 percent from a year earlier.

The West is the region most impacted by limited housing supplies and its existing-home sales slipped 1.1 percent in the first quarter but are 0.6 percent above a year ago. The median existing single-family home price in the West leaped 24.4 percent to $247,800 in the first quarter of 2012.

Reasons You Could Ruin Securing The Lowest Mortgage Rate

It is up to you and it involves your necessary steps in order to make your application desirable to lenders when it comes to securing the lowest mortgage rate possible. In the case that you already know what lenders requires when they evaluate your home loan you must now do what is needed to make certain that you’ll get the home loan you desire and the home loan you are dreaming of. Be found lacking in taking these steps can be unfavorable to your probability of home ownership.

The following are six sure fire approaches to wreck your likelihood of securing the lowest mortgage rate:

Having poor credit - Bad credit is a definitely a sure destroyer when it comes to acquiring a low rate on your mortgage. In the condition that your credit rating is depleted afterward you can anticipate to be offered an extensively higher interest comparing to those who have finer or exceptional credit. In some cases, you may even be completely denied credit or have to get hold of a bad credit mortgage. Concentrating to your credit issues prior to trying to purchase a home loan can spare you the frustration of not getting the penny-pinching interest rates.

Having too many debts - Even though you have good credit, holding excessively many debts can as well disapprovingly impact your chances of securing an reasonably priced mortgage rate. The higher your debt-to-income ratio is, the more possible you are to be presented a sky-scraping interest rate or less advantageous loan terms. What you need to do first is pay down your debts and you will boost your probability of getting the greatest rates possible. Not having enough in savings - The less money you have in savings or that you can place towards a down payment, the more you'll need to have a loan of, basically making you more of in a fortuity. Having reserves is a good deal tool and can assist you counteract every unforeseen financial troubles.

Not comparing loan rates & fees - weigh against rates is a brilliant method that you can be guaranteed of getting the most excellent deal existing. Agreeing to the initial rate you are referred or deciding on a rate based only on the information given by one lender can be very unfavorable and will cost you money.

Not researching your broker & lender - Not every broker or lender has the loan you require or the means to find you the loan you want. Deciding the right broker and lending company is one of the most vital processes in acquiring the lowest mortgage rate possible.

Not asking enough questions - throughout the home buying procedure, inquiring on questions is one of your finest means in getting the responses and information that you want. Do not be terrified or be indecisive to raise any questions that you might have. If you will not going to do this, it will cost you more harm than good.

from: http://springhillgrouphome.com/2013/05/reasons-you-could-ruin-securing-the-lowest-mortgage-rate/