Could Mortgage Brokers Become Extinct?

With some large banks cutting back on doing business with mortgage brokers many mortgage brokers or mortgage companies could be closing their doors.

This could be very bad news for borrowers because with fewer brokers in the marketplace things will become less competitive and more expensive for you to obtain a home loan. It won’t be so easy to shop and compare rates.

To read the entire article, please visit: http://money.cnn.com/2009/02/12/real_estate/lenders_drop_mortgage_brokers/index.htm?postversion=2009021213

REVERSE MORTGAGES

It is thought that since the “baby boomers” are reaching retirement that there will be a huge demand for Reverse Mortgages. The baby boomer’s are generally referred to the baby’s that were born between 1946 and 1964.

In order to qualify for a RM (reverse mortgage) you must first own your home outright (or minimal balance), all owners must be at least 62 years of age and you must live in your home.

You should always consult with your family attorney or financial advisor before entering into a Reverse Mortgage. Your home is a valuable asset and knowing your rights and responsibilities as a borrower may help minimize any financial risks you may face.

The loan proceeds can be paid to you in monthly advances, through a line-of-credit, a lump sum payment or a combination of all three options. The amount that you can borrower generally is based on your age, the equity in your home and the interest rate the lender is offering. Sine you still own the home you will still be responsible for the taxes, repairs and maintenance.

You are protected under the Federal Truth in Lending Act (TILA), which requires your lender to inform you about the plan’s terms and costs. Be sure that you understand them before you sign anything. Lenders must provide specific information on rates and payment terms.

Key Point to Remember
Your legal obligation to pay back the loan is limited by the value of your home at the time you pay off the loan.
You can never owe more than the home is worth.
The loan proceeds are not taxable. If you receive Social Security Income the advances will not affect your benefits as long as you spend them within the month you receive them.

When in doubt, check with a benefits special at a local agency or legal services office.
A good source of information is AARP. You can write them at:

AARP Home Equity Information Center
601 E. Street, NW
Washington, DC 20049 or visit their website at http://www.aarp.org/

Forensic Loan Audit

It has been estimated that over 80% of loans that were obtained between 2001 and 2006 have predatory lending violations. Most of the violations involve TILA (Truth In Lending Act) or RESPA (Real Estate Settlement Protection Act). The Lender or Bank that now owns these loans is now liable for these violations. The penalties vary but in most cases the bank would be responsible to pay legal fees for both parties if they are found to be in violation. That can add up fast.

Any homeowner that is serious about obtaining an aggressive loan modification should start with a Forensic Loan Audit. There are many companies out there willing to do a forensic audit independent of a modification service or in conjunction with their loan modification services. This is not intended to be legal advice, (you will need to consult an attorney) but an experienced attorney can tell you exactly what the consequences are. If you do decide to proceed have your attorney request a restraining order so that no payments or late fees will be required until the situation has been resolved. With the threat of foreclosure and the possible litigation might be enough for your lender to reduce your balance to current market value as well as a possible rate reduction.
If you attempt to do the loan modification your self and don’t have success (remember to be persistent) it may be time to seek the services of an attorney to negotiate on your behalf. When you have an attorney requesting loan documents and fighting for your loan modification the bank is more likely to work with you. They will realize that the threat of being sued to real. You may determine that the $2,000 - $4,000 that you will spend for an attorney will be well worth it if your principal balance and interest rates are reduced.