Buying Consumer Protection Home Loan 2016 | Home Loan | Home Loan Rates | How To Get Home Loan At Low Interest Rate

Many thanks for coming back! So the rep for the bank my company is affiliated with came by last Friday, and we exchanged the usual chit chat, talked about his new baby, and some of the transactions that we had just wrapped up.Buying Consumer Protection Home Loan 2016.Then, from the back of my mind, came a question I had wanted to ask for about a month, but just kept forgetting about due to the hustle & bustle of an abnormally busy November/December.What the hell is happening with Two Sides Home Loan Affordability 2016 Officer compensation in April? We got word a while back that congress would once again be “protecting the consumer” by regulating the way in which Mortgage Professionals are compensated, but it was just talk. If we reacted to every bit of innuendo that comes down the pike, we would go crazy.

Just like “forbidding” Yield Spread Premium, the HVCC, and the “more transparent” Good Faith Estimate (GFE), our friends in D.C. will be inserting themselves into a world they know little about. This is done in the name of Home Loan Consumer Protection , but we remain skeptical. As with all things, I could give a rat’s posterior about the intent my singular concern is results. And the result of this will almost undoubtedly be higher rates for the consumer.I suspect the real purpose of this is to once again level the playing field for the big banks, whose costs per transaction are higher than smaller, more nimble lending companies.

Details of how it’s going to work out in the end remain sketchy, so I thought I would highlight how some other recent consumer protections are working:-

1: - Yield Spread Premium & the Infinite Madness Way back in 2008, mortgage brokers were allowed to earn money in two ways:Up front fees charged directly to the consumerRebate paid by the bankThis rebate, or “Yield Spread Premium” (YSP), was valued in direct proportion to the interest rate of the loan. Generally, this meant the higher the rate, the higher the YSP. The “do-gooders” among us would say that this is an incentive to “rip-off” the consumer. And in some cases, they would be right. However, there were some important functions served by the existence of YSP, a couple of which I will go over here.The first and foremost of these important functions was to offset pricing hits. Pricing hits are determined using the same measure of value as YSP, which are basis points. What is a pricing hit? It is a cost for certain circumstances considered to be less favorable to the investor buying your note. For example, let’s say your loan-to-value ratio (LTV) is greater than 80% and your friend has an LTV that is less than that. You would have a greater amount of pricing hits than your friend, because your higher LTV represents a greater risk to the investor. Not all borrowers have pricing hits, and many Home Loan Program 2016 have few hits to consider. However, YSP allowed brokers to cover the cost of those pricing hits without charging more in up front fees to the consumer. Another way YSP served the consumer was it’s role in the “no closing cost loan”. The originating lender would quote a higher rate (meaning more YSP) in exchange for no up front closing costs. The borrower was of course still paying for all the normal costs associated with closing a home loan; the cost is in the form of a higher interest rate, rather than in up front fees. These Home Loans were very popular with some consumers. Indeed, some lenders advertised themselves as the “home of the no closing cost loan”. Wikimedia Commons Well, the fine folks in Washington, D.C. got rid of this, making it illegal to retain YSP. Going forward, all YSP had to be credited back to the borrower.

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Lenders charge well more than what used to be considered normal up front, then credit back most of that charge in the form of YSP.Here’s how that breaks down In 2008, if your lender charged 2 points per loan (2 per cent of the loan amount), it would be common practice to charge 1 point up front to the consumer, and then quote a Home Loan Rate that paid 1 point in YSP (after all pricing hits had been accounted for).This was all disclosed on the Good Faith Estimate. Now, if your lender charges 2 points for a loan, the Home Loan Process becomes quite convoluted. Let’s say, for the sake of round numbers, that $200,000 is the amount of the loan in question. To make 2 points, the lender might charge those 2 points up front, and quote you a rate that credits 1 point back to you thus maintaining the appearance that the loan only cost you 1 point, even though they made 2 points.

That’s how it’s done on the broker side of things.And the banks, you ask? Well, the large financial institutions don’t pay YSP. That is what the wholesale banks deal in. The big retail banks have something called “Service Release Premium”, or SRP. The law in question only dealt with YSP, leaving SRP free to roam the housing market. If this sounds like an unfair advantage to certain institutions, we would agree. It should come as no surprise that many big banks were behind the effort to eliminate YSP. Did we mention that retail lenders don’t have to disclose the SRP on Home Loan Transactions? Wikimedia Commons2: You down wit’ HVCC? The Home Loan Valuation Code of Conduct, or HVCC, has been roundly criticized as ridiculous by almost everyone in the Real Estate industry. At least the people we talk to, who actually work in the field.

And the result of the HVCC is that the bank, and not the consumer, is the real customer of the appraisal company. There is almost no accountability to the consumer, and there is considerable incentive for appraisers to short value. Shorting value means there will be less risk to the bank of negative equity, in the event that particular market suffers further deterioration.While I understand the need for the bank to protect itself from future problems, I think that we are getting away from what an appraisal is an opinion of current market value. I’m not saying every appraisal is injurious to the borrower, but I have seen many appraisals come in exactly at the Compare Home Loan Prices agreed to in the purchase & sale agreement, which strikes me as quite odd. On the accountability issue, I have one HUGE complaint with the HVCC , the Loan Officer is not allowed to speak with the appraiser. This is supposed to remove “undue influence” by a financially interested party. However, the Loan Officer’s job is to fight for his borrower. If an appraiser issues an opinion of value that is easily refuted based on readily available facts, there shouldn’t be anything wrong with a polite conversation to clear the air. It is, after all, an opinion of value. Opinions should be subject to refutation when evidence to the contrary exists. As it stands now, the bank is the only party that can request a review. Where is the consumer in all this? Isn’t that who we are pretending to protect? 3: The Good, The Bad, and The Downright Confusing Wikimedia Commons Last on our list of outstanding achievements in consumer protection is the Good Faith Estimate associated with a residential mortgage. The Good Faith Estimate is an estimate of fees & prepaid items for closing your loan. It comes from the lender.

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There are a lot of parties who collect fees on your Home Loan, and the lender has to disclose all of those fees to you, even though they are not the recipients of many of those fees. It has been said a couple times, over the course of my 5+ years in the mortgage industry, that the Good Faith Estimate is confusing, and needs to change in order to become more easily understood by consumers.I recently found the Good Faith Estimate from when I bought my home in 2002. Here it is. It’s pretty clear, especially with the notes our lender wrote on it when we went over it.I dug through some old files, and found a Good Faith Estimate from 2008. Here’s that. Even better. A complete itemization of all fees incurred by the borrower for a Home Loan Financing .And finally, the most recent simplification from regulators, a Good Faith Estimate from 2010.Now I want to start by saying that there are some features of the newest version of the GFE that I think are great improvements. The section title “summary of your loan” is chief among them.

It outlines Key Features of Home Loan, such as whether the rate is fixed, whether or not there is a prepayment penalty, and whether or not there is any negative equity associated with your mortgage (even though I haven’t seen a negative equity loan offered in years). However, I wouldn’t “be me” if I didn’t point out what I consider to be some serious shortcomings, if not outright omissions. Adjusted Origination Charges Lender fees & origination charges are lumped together. These are not always charged by the same entity, so I think they should be itemized to provide a clear view of exactly who is charging what.There is no satisfactory explanation for the mysterious credit. If we are really interested in transparency, there should be an explanation,in writing, of how the Home Loan Affordable Prices works.

Your Charges For All Other Settlement Services :- It is required that the owner’s title insurance premium be disclosed here for a purchase transaction. Translation: the seller’s title insurance premium is disclosed like it is a charge to the borrower, when it is actually taken out of the seller’s proceeds. It seems completely unnecessary. In fact, the Real Estate industry got along just fine without this for ever.Understanding which charges can change .

At Settlement :- There are way too many “if’s” in this section. It really isn’t too complicated to estimate any of these charges to well within the legal tolerance. Even if your lender has followed the letter of the law, the initial estimate should be pretty darn close to reality. We actually over-estimate and pad a little bit. People like to hear they have to come up with less cash-to-close, as opposed to the alternative.

The Loan Trade-Off Table :- We used to just present a separate GFE for every Home Loan Program the client wanted to know about. Again, there is almost no itemization in this new GFE, and this section falls well short of clarity when comparing the costs associated with different scenarios.Obviously, nothing can ever be perfect. However, we find that most clients prefer the 2008 version of the GFE. How do we know? Because there is a form called the “Initial Fees Worksheet” which looks identical to the old Good Faith.What’s that for?It is used by Loan Officers to input the information found on the new GFE.Why is it used for that? Because it is easier to fill out than the new GFE. Whew! That makes total sense.Now that is obviously not a scientific poll, but we have never had a client who preferred the new GFE to the old one. EVER! Library of Congress Flickr Combating The RidiculousIt’s my opinion that the only way to combat abuses and unprofessionalism in the Mortgage Industry is through the demands of a highly educated class of consumers.

Biphoo