Fed: Give Borrowers Time to Change Their Minds
The Federal Reserve released a proposal Monday to give mortgage applicants three days to change their minds.
The proposal was part of a 930-page document that clarifies and finalizes the new financial reform law.
The Fed’s document says that for closed-end loans secured by real property or a dwelling, a creditor must:
• “Refund any appraisal or other fees paid by the consumer (other than a credit report fee), if the consumer decides not to proceed with a closed-end mortgage transaction within three business days of receiving the early disclosures (fees imposed after this three-day period would not be refundable); and
• “Disclose the right to a refund of fees to consumers before they apply for a closed-end mortgage loan.”
The Fed says this proposal will make it easier and cheaper for consumers to comparison shop. It also acknowledged that borrowers who want to close a transaction in a hurry would be handicapped because most lenders will delay sending out an appraiser for a few days.
Other proposals affecting home buyers included:
• A ban on yield-spread premiums, which encourage mortgage brokers to push buyers toward more profitable mortgages.
• A requirement for lenders to tell borrowers when their mortgage is sold or transferred.
• An explanation of the effects of balloon payments, adjustable loan payment fluctuations, and minimum payments on loan balances.
Source: Bankrate.com, Holden Lewis (08/17/2010)
Front Gate Properties, We’re selling the BEST Real Estate in Aiken, SC.
One-Third of Home Mortgage Applicants Denied
Nearly one third of people who applied for a mortgage last year were denied, the Federal Reserve reported Wednesday.
The denial rate was up 29 percent from 2006 when approvals were highest. Last year’s denial rate was twice as high for African-Americans and Hispanics as it was for whites.
FHA insured more than 50 percent of all loans to African-Americans and 45 percent to Hispanics. Nearly 17 percent of African-Americans and 15 percent of Hispanics got high-priced loans, compared to 7 percent of whites.
The Mortgage Bankers Association said lenders weren’t discriminating by race, but making decisions base on credit score and the size of the down payments.
The data, collected from nearly 8,400 lenders, is required under the Home Mortgage Disclosure Act of 1975.
Source: The Associated Press, Alan Zibel
Front Gate Properties, We’re selling the BEST Real Estate in Aiken, SC.
Fed Urges More Rules for Mortgage Applicants
The Federal Reserve on Thursday recommended new disclosure rules for home owners that would make the process of getting a home mortgage more understandable.
Mortgage applicants would receive a single-page explanation of key issues concerning their loan and see a graph comparing the interest rate they were being offered to that given a low-risk borrower, the Fed said.
The Fed also recommended new compensation guidelines for mortgage brokers. Under the new rules, brokers would not receive more money for putting a borrower into a high-cost loan.
“Consumers need the proper tools to determine whether a particular mortgage loans is appropriate for their circumstances,” Fed Chairman Ben Bernanke told an open meeting of the Fed.
Source: The Associated Press, Jeannine Aversa
Front Gate Properties, We’re selling the BEST Real Estate in Aiken, SC.