Posted on: 09th Apr, 2008 10:03 pm
Hi!i this is the first time i am here and think you can help me with my queries. I was just planning to buy my first ever home but i hear the fed having made some changes in the mortagge process. any updates on that?just want to know the things and then move ahead. :) :)
Hi queryfox,
Welcome to the forum.
FED has proposed to reform the mortgage process from the mortgage application to the closing. FED tries to make the process simple and ensures that the lender estimate the closing cost more accurately so that the borrowers can avoid the eleventh hour's surprise and do not have to see the thousands of dollar's of hike in the fees that the initial estimate.
• When you provide the basic information to the broker or the loan officer, you will get a four page good faith estimate of your closing cost.
• The interest rates and the closing cost will be clearly stated
• The good faith estimates will be accurate and the total fees cannot be higher than 10 percent of total of the estimate.
Feel free to ask if you have any further questions.
Best of luck,
Larry
Welcome to the forum.
FED has proposed to reform the mortgage process from the mortgage application to the closing. FED tries to make the process simple and ensures that the lender estimate the closing cost more accurately so that the borrowers can avoid the eleventh hour's surprise and do not have to see the thousands of dollar's of hike in the fees that the initial estimate.
• When you provide the basic information to the broker or the loan officer, you will get a four page good faith estimate of your closing cost.
• The interest rates and the closing cost will be clearly stated
• The good faith estimates will be accurate and the total fees cannot be higher than 10 percent of total of the estimate.
Feel free to ask if you have any further questions.
Best of luck,
Larry
whatever the final rules may be, that ought not to impact your qualifying for a mortgage. if your credit is sufficiently good, your income sufficient to allow for repayment, your debt load not especially high, you'll typically have no difficulty in qualifying.
the changes that are being discussed should enhance your understanding of what it is you're getting into. truth-in-lending laws came into being almost 40 years ago, and there has not yet been a day when everyone involved understood everything that was placed before them. i surmise that this will continue to be the case. nevertheless, we need to pray that the effort going forth to clarify matters will be more successful and will alleviate a lot of the confusion that has been rampant in the mortgage markets.
the changes that are being discussed should enhance your understanding of what it is you're getting into. truth-in-lending laws came into being almost 40 years ago, and there has not yet been a day when everyone involved understood everything that was placed before them. i surmise that this will continue to be the case. nevertheless, we need to pray that the effort going forth to clarify matters will be more successful and will alleviate a lot of the confusion that has been rampant in the mortgage markets.
Well said george. Yes, we all have to see to it that our finances and credit are in good order if getting a mortgage is in our list.
Here are a few more additions to the proposed Fed changes to the GFE:
1. The GFE should provide the closing costs in detail along with tips on how to compare loan offers. The actual costs should not exceed the estimated costs by 10%.
2. The trade-off between interest rates and lender fees should be clearly explained.
3. Someone has to read out the "closing script" which gives a summary of the closing deal and the settlement charges. If there's any inconsistency in the rate and fees as mentioned in the GFE and the final values then it should be informed to the borrower.
4. If there is a broker involved, then his compensation fee from the lender in the form of yield spread premiums should be mentioned.
I believe there will changes every now and then in the industry but one needs to have the basics right, that is, plan his finances so that he remains unaffected even if the changes may not be in his favor.
Here are a few more additions to the proposed Fed changes to the GFE:
1. The GFE should provide the closing costs in detail along with tips on how to compare loan offers. The actual costs should not exceed the estimated costs by 10%.
2. The trade-off between interest rates and lender fees should be clearly explained.
3. Someone has to read out the "closing script" which gives a summary of the closing deal and the settlement charges. If there's any inconsistency in the rate and fees as mentioned in the GFE and the final values then it should be informed to the borrower.
4. If there is a broker involved, then his compensation fee from the lender in the form of yield spread premiums should be mentioned.
I believe there will changes every now and then in the industry but one needs to have the basics right, that is, plan his finances so that he remains unaffected even if the changes may not be in his favor.
Good information has been provided to you here.
Many of the proposed changes are still being hard fought by some of the people in our industry. The proposed changes are not necessarily in the best interest of the consumer in many people's opinions. It seems bank Lobbiest's have influenced some of the proposed changes as they clearly are in favor of big bank interest and not necessarily consumers.
For example the new propopse law would require ONLY mortgage brokers to fully disclose all upfront fees and any lender compensation before the application if even taken! There would be no ability to use lender compensation to pay for consumer's closing costs. There would be little ability to shop for a better rate as the terms were already set before the application was even taken. And most troubling of all only mortgage brokers will be required to provide this disclosure. Mortgage Bankers and large banks will have the freedom to continue to charge the client's whatever fee's they wish and not be obligated to disclose their fee's to the client. This would be harmful to the consumer since it would limit the ability of the broker to seek out the most favorable terms on their behalf and would unfairly steer consumers to possibly less favorable loans from banks.
It is a convoluted and difficult sea of issues in this industry. Where there used to be millions of mortgage brokers licensed in the country I believe the last estimate I saw was somewhere around $200,000 remaining.
The brokers remaining overall I think want to ensure that the consumer is informed and protected just as much (if not more) than big banks or the government. We are in favor and in fact more than anyone should be championing the cause of the average consumer. What we must be dilligent in doing is taking care that big banks are not left to create an unfair market and capitilize on media fed consumer fears in order to gain a greater market share at the cost of choices or better options for the consumers.
Okay I'm getting off my pedastal now.. carry on :)
Many of the proposed changes are still being hard fought by some of the people in our industry. The proposed changes are not necessarily in the best interest of the consumer in many people's opinions. It seems bank Lobbiest's have influenced some of the proposed changes as they clearly are in favor of big bank interest and not necessarily consumers.
For example the new propopse law would require ONLY mortgage brokers to fully disclose all upfront fees and any lender compensation before the application if even taken! There would be no ability to use lender compensation to pay for consumer's closing costs. There would be little ability to shop for a better rate as the terms were already set before the application was even taken. And most troubling of all only mortgage brokers will be required to provide this disclosure. Mortgage Bankers and large banks will have the freedom to continue to charge the client's whatever fee's they wish and not be obligated to disclose their fee's to the client. This would be harmful to the consumer since it would limit the ability of the broker to seek out the most favorable terms on their behalf and would unfairly steer consumers to possibly less favorable loans from banks.
It is a convoluted and difficult sea of issues in this industry. Where there used to be millions of mortgage brokers licensed in the country I believe the last estimate I saw was somewhere around $200,000 remaining.
The brokers remaining overall I think want to ensure that the consumer is informed and protected just as much (if not more) than big banks or the government. We are in favor and in fact more than anyone should be championing the cause of the average consumer. What we must be dilligent in doing is taking care that big banks are not left to create an unfair market and capitilize on media fed consumer fears in order to gain a greater market share at the cost of choices or better options for the consumers.
Okay I'm getting off my pedastal now.. carry on :)
