Feds still targeting deceptive mortgage ads

Effective August 19, 2011 a federal truth-in-lending law strengthens bans against deceptive advertising from mortgage lenders, brokers, and servicers; real estate agents and brokers; advertising agencies; home builders; lead generators; rate aggregators; even on- and off-line publications.

by Broderick Perkins
© 2011 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime



Deadline Newsroom - A new federal rule targets mortgage advertisers who attempt to pull the wool over consumers' eyes when they shop for a home loan.

Effective August 19, 2011 a federal truth-in-lending law strengthens bans against deceptive advertising offered by mortgage lenders, brokers, and servicers; real estate agents and brokers; advertising agencies; home builders; lead generators; rate aggregators; and others, including on- and off-line publications.

The Federal Trade Commission (FTC) rule does not cover banks, thrifts, federal credit unions, and other entities not regulated by the FTC.

For years, the FTC has been at war with outfits using deceptive mortgage advertisements.

As recently as June this year, the agency sent hundreds of advertisers and media outlets warning letters that some mortgage ads are either potentially deceptive or in violation of the Truth in Lending Act.

The massive missive mailing came following a nationwide review of claims for low monthly mortgage payments or low, low interest rates, without adequate disclosure of other important loan terms.

Some ads claimed rates as low as 1 percent, but failed to disclose adequately:

• That the stated rate was a "payment rate," not the interest rate.

• That the payment rate applied only during the loan's brief initial period.

• The loan’s Annual Percentage Rate (APR), the uniform measure of the cost of credit that enables consumers to shop for and compare mortgage offerings.

The fraudulent behavior is not unlike actions used to push toxic mortgages that became the scourge of the economy and helped plunge the nation into recession, the effects of which are still felt today.

Since 1995, the FTC has busted dozens of mortgage operations for a host of infractions, including:

• Claims for loans with specified terms, when no loans with those terms were available from the advertiser.

• Misrepresentations that rates were fixed for the full term of the loan.

• Misrepresentations about, or failure to adequately disclose, the existence of a prepayment penalty or large balloon payment due at the end of the loan.

• Claims of mortgage payment amounts that failed to include loan fees and closing costs of the kind typically included in loan amounts,

• Failure to disclose adequately that the advertiser, not the consumer’s current lender, was offering the mortgage.

• False or misleading claims that consumers were "pre-approved" for mortgage loans.

The new rules list 19 examples of prohibited deceptive claims including misrepresentations about:

• The existence, nature, or amount of fees or costs to the consumer associated with the mortgage and other products sold in conjunction with the mortgage, including credit insurance and credit disability insurance.

• The terms, amounts, payments, or other requirements relating to taxes or insurance associated with the mortgage.

• The variability of interest, payments, or other terms of the mortgage.

• The type of mortgage offered.

• The source of an advertisement or other commercial communication.

• The consumer's ability or likelihood of obtaining a refinancing or modification of a mortgage or any of its terms.

New rules also address misrepresentations involving pre-payment penalties; interest rate and payment comparisons; affiliation with government agencies and a consumers likelihood or ability to obtain a home loan.

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Fannie Mae hones assistance for homeowners facing foreclosure

Click on my big head!

In a detailed set of new standards, Fannie Mae declares servicers must take a more consistent, time conscious and customer-centric approach to homeowners facing foreclosure. Fines put teeth in the new standards.

by Broderick Perkins
© 2011 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - If only the growing reams of new mortgage regulations, disclosures, standards and legal settlements would actually reach and aid the teeming throngs of financially struggling homeowners.

One of the latest attempts to get mortgage servicers (often lenders) to behave like they have customers' best interests at heart comes on the heels of a recent settlement that was supposed to cure some of the same ills.

In a detailed set of new standards, Fannie Mae declares servicers must take a more consistent, time conscious and customer-centric approach to homeowners facing foreclosure.

"We want homeowners to be able to understand their options when facing foreclosure, and we want servicers to reach homeowners early in the process, communicate frequently and clearly, and help homeowners avoid foreclosure," said Jeff Hayward, Senior Vice President of Fannie Mae's National Servicing Organization.

Read the full story: "Fannie Mae Hones Assistance for Homeowners Facing Foreclosure"

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Under the DeadlineNews Group umbrella:

Perkins was the first Examiner to cover three beats for the Examiner.com news service:
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• National Offbeat News Examiner

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Federal consumer watchdog digging into mortgage disclosures

Your new consumer watchdog agency is asking you, consumers, and mortgage professionals to participate in getting this right. This is a sterling example of social networking at its finest. The agency wants you to take a look at two new mortgage disclosure forms and provide feedback, telling the government exactly what you think. They need all the help they can get.  DVD to the right explains, in vivid detail, why the sky fell and why CFPB was necessary. 

by Broderick Perkins
© 2010 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - Chronic confusion about home loans has prompted a new federal consumer agency to attempt what has been impossible -- create mortgage disclosures that clearly explain the true cost of borrowing.

The new Consumer Financial Protection Bureau (CFPB) recently released two draft mortgage disclosure forms designed to take some of the hair pulling and teeth gnashing out of learning what your mortgage really costs.

The consumer watchdog agency is asking you, consumers, and mortgage professionals to participate in getting it right. This is a sterling example of social networking at its finest. The agency wants you to take a look at the two forms and provide feedback, telling the government exactly what you think.

"Know Before You Owe," is an example of the new consumer watchdog's effort to put true clarity in "transparency" when it comes to financial disclosure forms.




Mortgage disclosures are a top priority for many reasons.

• Buying a home is the most expensive acquisition or investment most consumers will ever undertake. A home is often a consumer's or family's most valuable asset. You have a right to know what your home truly will cost.

• Ignorance, due to poor disclosures (in addition to outright deception, as well as consumers' own lack of due diligence) gets some of the blame for housing's crash and the worst recession since the Great Depression.

• Consumers have been complaining about mortgage disclosures and the difficulty they have understanding a home loan contract for eons.

"Most consumers have a tough time wading through all the fine print typically found on mortgage documents and other financial disclosure forms," said Norma Garcia, senior staff attorney for Consumers Union, the nonprofit publisher of Consumer Reports.

Among other elements, CFPB's forms include a clear statement, explaining that the borrower is under no obligation to choose a loan product. That helps take away undue influence which has been common in the mortgage lending process.
"This statement will help encourage consumers to shop and compare products, which will have the added benefit of increasing competition among lenders for borrowers' business," Garcia said.

Chronic confusion

A litany of studies reveal just how little consumers know about mortgages.

• Five years ago, just about the time the nation discovered Chicken Little wasn't crying "Wolf!" the AFL-CIO and BankRate.com issued studies that revealed mortgage consumers were confused, concerned and craving more regulatory protection.

The AFL-CIO found 73 percent of adjustable rate mortgage (ARM) holders, didn't have a clue how much their monthly mortgage payment will increase or decrease the next time their rate adjusts. Nearly half, 49 percent, said they weren't very informed about their mortgage's terms and conditions. One in five did not know their current interest rate.

Bankrate.com found more than one in three homeowners didn't even know what kind of mortgage they had, a fixed-rate mortgage (FRM) or an ARM.

• A November 2010, Consumer Reports national poll found that 76 percent of respondents wanted the CFPB to make clearer mortgage and financial disclosures a priority. The majority, 84 percent who had applied for or received a loan or credit card in the past 12 months indicated difficulty with financial disclosures; 31 percent described the disclosures as not clear or easy to understand.

• Early this year a MortgageMatch survey noted the mortgage application process was so excruciating, 21 percent said the ordeal was more stressful than waiting to hear if they got a job. Technical jargon was too much for 21.6 percent of those surveyed and 20.7 percent said it was a challenge to find a lender who was easy to work with. More than 32 percent of survey respondents ranked the application process more challenging than getting the mortgage itself (23 percent) or negotiating the sale price on the home (25.3 percent).

• Finally (but probably not), this month, after years of attempts to overhaul the mortgage industry, not only isn't greater transparency inducing consumers to shop around for mortgages, Zillow Mortgage Marketplace found many home buyers are still miserably in the dark about mortgages.

The Zillow-surveyed group was wrong 46 percent of the time when asking basic questions about mortgage information. More than half, 57 percent of prospective home buyers did not understand how ARMs work. Nearly half, 45 percent, believed they should always buy mortgage discount points. More than one third, 34 percent, did not understand that lender fees vary by lender and are negotiable.

"The draft mortgage disclosure forms prepared by the CFPB will help borrowers compare loans more easily and help eliminate surprises at closing and during the life of the loan. But it's important to remember that consumers need strong protections against shady mortgage practices not just improved disclosure," she added.

For sure.


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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

Under the DeadlineNews Group umbrella:

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Mortgage maze still leaves home buyers in a haze

Bed bugs get own web site(s)

Forty-four percent of housing consumers admitted they aren't confident in their mortgage knowledge or the mortgage process. The surveyed group also answered basic questions about mortgage information wrong 46 percent of the time.

by Broderick Perkins
© 2010 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - It's not just that credit is tight and incomes are light.

After years of overhauling the mortgage industry with reams of regulatory bans, counseling mandates, prohibitions and disclosures, too many home buyers still don't have a clue about home loans.

Zillow Mortgage Marketplace, with Ipsos, surveyed prospective home buyers, asking them about their knowledge of mortgages and mortgage facts.

They barely got a passing grade.

Forty-four percent admitted they aren't confident in their mortgage knowledge or the mortgage process.

The surveyed group also answered basic questions about mortgage information wrong 46 percent of the time.

After years of similar studies it appears that mortgage maze confusion remains chronic.

Both produced almost a half decade ago, the AFL-CIO-commissioned "Homeowners Confused, Worried About ARMs (adjustable rate mortgages)" and BankRate.com's "Mortgage Ignorance Rampant," reveal how American's have had a love-hate relationship with mortgages for years.

Earlier this year, a Move.com survey found consumers frustrated and confused about the mortgage process.

Zillow reveals people remain mystified and distrustful of the mortgage industry and that's not helping the pallid home buying market.

"Most people wouldn't jump out of a plane if they didn't know how to use a parachute, yet each year many buyers commit to the largest loan they will take out in their lifetimes without understanding essential information about mortgages," said Zillow Mortgage Marketplace Director, Erin Lantz.

Zillow found:

• More than half (57 percent) of prospective home buyers who were polled did not understand how adjustable rate mortgages (ARMs) work. The majority of home buyers believe ARM rates always reset higher after five years. In reality, interest rates adjust to the prevailing rate after five years, as they've done recently for those who purchased with 5/1 ARMs five years ago, according to Erate.com.

• One-third (34 percent) of those surveyed, who were prospective home buyers, did not understand that lender fees are negotiable and that they vary by lender. They believed lenders are required by law to charge the same fees for credit reports and appraisals. Home buyers can shop around for the best fees.

• Nearly half (45 percent) of polled prospective home buyers believe that they should always buy mortgage discount points when obtaining a mortgage. Not necessarily. Mortgage discount points are prepaid interest. The decision to buy them should depend on how long you intend to own the home. You might not remain in the house long enough to break even after buying points, Zillow explained.

• More than half (55 percent) of prospective home buyers in the study did not understand that mortgage rates vary throughout the day. Mortgage rates can change rapidly, similar to stock market prices, according to Zillow. Shop around for rates and keep in touch with your lender.

• More than one-third (37 percent) of prospective home buyers who were polled said that pre-qualifying for a loan means they have secured financing. "Pre-qualification" is only the earliest step in the mortgage application process. It's when a lender approximates how much you can afford, but may not run your credit or examine documentation to verify your information. Only after the lender has approved your loan application -- without condition -- can you be sure the lender is committed to making the loan.

• More than two in five (42 percent) of the polled prospective home buyers did not understand that Federal Housing Administration (FHA) loans are available to all buyers. Instead, they believe only first-time buyers qualify. FHA loans, the subprime better-idea, have become more difficult to obtain, but they can cost less for many buyers, including repeat buyers with low to average credit scores and with down payments of less than 20 percent.

"By simply spending a few hours researching how a mortgage works, and by shopping around for the most competitive rates and fees, buyers can save a lot of money," Zillow's Lance said.

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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

Under the DeadlineNews Group umbrella:

Perkins was the first Examiner to cover three beats for the Examiner.com news service:
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MARS' loan modification protections extend to short sales, other foreclosure relief

Click: Consumer news

MARS news has been focused largely on the cottage industry of private companies offering modification services to consumers, but the rule impacts all mortgage assistance relief services including those offering short sale services and other assistance.

by Broderick Perkins
© 2010 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - Rules protecting consumers from being taken by modification services also extend to short sale services and other forms of mortgage assistance, including some assistance offered by real estate agents.


Effective Jan. 31, 2011 modification assistance firms have been banned from collecting fees until a home owner agrees with a written foreclosure or modification plan approved by their lender or loan servicer.

The ban and other related disclosure and regulatory provisions are part of the Federal Trade Commission's (FTC) "Mortgage Assistance Relief Services (MARS) Rule", designed to curb fraud, scams and rip-offs in the distressed mortgage services industry.

While MARS news has been focused largely on the cottage industry of private companies offering modification services to consumers, the rule impacts all mortgage assistance relief services including those offering short sale services and other assistance.

Some real estate agents must comply

Laurie Janik, National Association of Realtors' general counsel, recently reviewed the new rule at a forum during the Realtors 2011 Midyear Legislative Meetings & Trade Expo in Washington, D.C. and put on notice, real estate agents who provide short sale services, according to a recent DSNews report.

"As the leading advocate for homeownership, NAR supports efforts to ensure that mortgage assistance relief services truly benefit consumers. Nevertheless, NAR has some concerns about the rule and its application to real estate professionals involved in short sales transactions," Janik told DSNews.

But it's not just short sales. The official Federal Register Vol. 75, No. 230 rendition of the rule is pretty clear, as federal regulations go.

"The Rule is intended to regulate for-profit providers of mortgage assistance relief services...defined as 'any service, plan, or program, offered or provided to the consumer in exchange for consideration, that is represented, expressly or by implication, to assist or attempt to assist the consumer' in negotiating a modification of a dwelling loan…stopping, preventing, or postponing a foreclosure or repossession; or obtaining one of several other types of relief to avoid delinquency or foreclosure... (including) a forbearance or repayment plan; an extension of time to cure default, reinstate a loan, or redeem a property; a waiver of an acceleration clause or balloon payment; and a short sale, deed-in-lieu of foreclosure, or any other disposition of the property except a sale to a third-party that is not the loan holder."

One question is obvious: If a company doesn't charge for mortgage relief services, does the MARS rule apply?

"Most of the local short sale specialists advertise this as a free service to our sellers and understand that the cost of the professional negotiations will be paid out of the hired Realtor's commission," said Julie Larsen Wyss, broker associate, Intero Real Estate Services, Los Gatos, CA.

Janik acknowledged to DSNews that real estate agents who do offer fee-based services must not take upfront fees, as the law requires, but she also voiced concern that other MARS rules could also apply to real estate agents helping with short sales, including rules that touch on disclosures, advertising, communicating with clients, negotiating a short sale or arranging for a short sale negotiation.

"NAR is discussing with the FTC some language in the second and third disclosures as well as some other requirements found in the MARS rule," Janik said, according to DSNews.

"The FTC is considering possible options to help make the rule more applicable to a real estate brokerage…when they are performing traditional real estate functions in a short sale transaction," she added.

A history of fraud

Too many foreclosure rescue and loan modification services became a festering outgrowth of the mortgage market meltdown that left many home owners underwater with a mortgage balance greater than the value of the home.

The operations often promised to be a go-between and negotiate with the lender to obtain a modification, short sale or some other relief from foreclosure. Some also duped home owners into believing they were affiliated with real government assistance programs.

Now, without up front fees, many fly-by-night operations don't have the capital to resume operations.

MARS does allow licensed attorneys to charge advance fees, provided the fees are held in an escrow (trust) account and provided the attorney complies with state laws and regulations related to the federal rule.

MARS rules are disclosure heavy. The rules say mortgage assistance relief services must disclose:

• The proposed cost of the service.

• That consumers have a right to reject any offer from the service or the lender without charge and can stop doing business with the service company at any time.

• That the service is not affiliated or associated with nor approved by any government entity.

• That the lender can reject any change to the home owner's loan.

• That home owners could lose their home and damage their credit rating if they follow a service's advice to stop paying their mortgage.

If services are offered or negotiated in Chinese, Korean, Spanish, Tagalong or Vietnamese, the disclosures must also be provided in the same language.

Foreclosure rescue and loan modification services are also prohibited from making any false or misleading claims about their services, including claims about results, government affiliation; the consumer's financial obligations; refund and cancellation policies; legal representation and the amount of savings a consumer can expect, among others.

Home owners should also check with their state rules for the services. Some states have stronger regulations than the federal MARS rule.

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© 2010 DeadlineNews.Com

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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

Under the DeadlineNews Group umbrella:

Perkins is managing editor of HomeAway.com's Gulf Coast Response Center.

Perkins was the first Examiner to cover three beats for the Examiner.com news service:
• National Real Estate Examiner
• National Consumer News Examiner
• National Offbeat News Examiner

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CRL lists top mortgage servicing abuses

Dance moves women want

The cost of doing business in mortgage lending includes finding more and more ways to separate you from what's in your wallet and regulations are typically too little, too late.

by Broderick Perkins
© 2010 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - Think federal regulations are making mortgage lenders behave?
Do you believe mortgage lenders have seen the light and want to make your experience as low cost as possible?

Have you been told the mortgage lending trade is looking for ways to cut your costs?

Bullocks.

Fugedaboudit.

Getting a home loan is an adversarial proposition. It's you against them.

The cost of doing business in mortgage lending includes finding more and more ways to separate you from what's in your wallet and regulations are typically too little, too late.

The Center For Responsible Lending found 10 ways mortgage lenders try to generate fees at your expense.

• 1. Misapplied payments. Even when payments are made on time, mortgage servicers "mistakenly" reject the check or apply it to the wrong account. The result is unjustified late fees and often other penalties as well. For homeowners, misapplied payments are a huge headache; for loan servicers, misapplied payments mean a chance for more income.

• 2. Illegal fees. It's not legal to charge the homeowner when the loan company pays for property monitoring or price opinions from brokers (BPO), but they do.

• 3. Two-faced "assistance." Many homeowners who are actively working with their mortgage servicer to work out their loan are surprised to learn that the company is also actively pursuing foreclosure, something called "dual tracking."

• 4. Blocked refinances. Loan servicers don't like to lose the steady income flowing from their mortgages, so it's in their best interests to stall attempts to refinance with a different company. Some loan servicers have refused to provide loan payoff information, preventing refinances and even home sales.

• 5. Squelched legal rights. Loan companies often include "waivers" with their loan modifications, which essentially say, "If you accept this modification, you give up your right to pursue any legal actions against us no matter what egregious acts we commit."

• 6. Botched taxes and insurance. Many mortgages have an escrow account for taxes and insurance that the loan company manages -- or not. When the company fails to pay these expenses on time, the homeowner is stuck with the penalties. And some companies require expensive hazard insurance (to cover damage from accidents, storms, etc.) even when insurance is already in place.

• 7. Zipped lips (no communication). When loan servicers believe a homeowner is late on a mortgage, it's important to send a notice. Sometimes they do, sometimes they don't.

• 8. Whirlwind foreclosures. Each state has laws governing the foreclosure process and when a lender can initiate foreclosure. In the rush to foreclose, some loan companies ignore key steps required by law.

• 9. Crazy foreclosures. This one is hard to believe, but it happens: the loan servicer begins foreclosure proceedings even though the homeowner is current on the mortgage.

• 10. Robo-signing and other fraud. Loan companies fail to review key documents or falsify court documents used to evic -- often because the companies haven't kept accurate records of ownership, payments and escrow accounts that would enable legal foreclosures.

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Get "News that really hits home!" for your Web site or blog from the DeadlineNewsGroup.Com.

You are reading a sample of "News that really hits home!" now available from several beats and published in a growing number of locations.

Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

Under the DeadlineNews Group umbrella:

Perkins is managing editor of HomeAway.com's Gulf Coast Response Center.

Perkins was the first Examiner to cover three beats for the Examiner.com news service:
• National Real Estate Examiner
• National Consumer News Examiner
• National Offbeat News Examiner

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Greater transparency isn't inducing mortgage consumers to shop around

"Biggest Loser" meal deal

An ING Direct study found consumers may not bother to shop around because new and improved disclosure documents are still too complicated, but that's really not much of an excuse. Asking for help deciphering the documents doesn't take a college degree.

by Broderick Perkins
© 2010 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - At some point, housing consumers are going to have to get off their duffs, give their serve-it-to-me-on-a-silver-platter brains a workout and perform due diligence when shopping for a home mortgage.

Federal regulatory overhaul injected greater transparency in the mortgage market with new, easier-to-understand mortgage cost disclosure materials, but most consumers just don't bother to reap the benefits.

Not only is that foolish, it also costs money -- perhaps thousands of dollars in some cases.

The Real Estate Settlement Procedures Act (RESPA), effective January 1, 2010, mandated a new and improved Good Faith Estimate (GFE) to make it easier to understand and comparison shop for mortgage estimates, but 70 percent of homeowners chose a mortgage provider without shopping around, according to a study by online direct bank ING Direct.

"The Good Faith Estimate is one of the most crucial documents a homebuyer will receive before making the biggest purchase of their life," said Arkadi Kuhlmann, ING's president and CEO.

The study found consumers may not bother to shop around because the documents are still too complicated, but that's really not much of an excuse. Asking for help deciphering the documents doesn't take a college degree.

• More than one in three homeowners (36 percent) described the GFE as "complicated" or a "waste of time."

• Some homeowners described the GFE as being "simple" or "easy to understand," but 68 percent of homeowners surveyed were unable to correctly identify, for example, the purpose of the title services charge on the GFE.

• Fifty-three percent of homeowners spent 30 minutes or less reading and reviewing the GFE.

• One in ten (11 percent) homeowners never reviewed the document.

Home loan originators must give you the mandated GFE within three days of accepting your application.

The three-page GFE, provided by the mortgage broker or lender, shows the loan terms and the settlement charges you will pay if you decide to go forward with a given mortgage. It explains which charges can change before settlement and which charges must remain the same.

Consumers are supposed to use the document as indicated.

The GFE clearly states that consumers should "compare this GFE with other loan offers, so you can find the best loan." It also contains a shopping chart and worksheets to encourage you to shop around and compare several mortgage loans and the settlement costs of each.

Along with the GFE, you'll also receive the new "Shopping For Your Home Loan: HUD's Settlement Costs Booklet" a guidebook that walks you through the GFE as well as the new "Settlement Statement HUD-1."

At closing, the lender must provide borrowers with the HUD-1, the final line-by-line disclosure of mortgage and closing costs.

The HUD-1 is a complete and final list of all your charges and credits. In addition to the cost of the property, your down payment, the financed amount, your monthly payment, and loan terms, it includes your loan type, annual percentage rate (APR), points, commissions, yield spread premiums, originating fees and other loan costs as well as title and escrow fees, closing costs, tax and insurance payments, inspection fees, attorney fees, and information and costs related to rate locks and prepayment penalties -- the works.

You have the right under Real Estate Settlement Procedures Act (RESPA) to inspect the HUD-1 Settlement Statement before settlement occurs and you should.

You should set aside a full day to see your HUD-1 document at least a day before closing, so you have time to go over all costs, eliminate surprises and ask the lender or other professionals involved any questions that might arise.

Get help reading the documents. Ask your real estate agent, broker, lender or other professional to earn their commission by helping you get through the documents.

Some community and social groups as well as you local housing office may also provide assistance.

Samples of all the documents are available at HUD.gov. Use the search feature to find "Good Faith Estimate," "Shopping For Your Home Loan: HUD's Settlement Costs Booklet," and "Settlement Statement HUD-1," before you are in the thick of buying or selling a home in today's market.

Getting familiar with the documents now, can save you money and headaches later.

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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

Under the DeadlineNews Group umbrella:

Perkins is managing editor of HomeAway.com's Gulf Coast Response Center.

Perkins was the first Examiner to cover three beats for the Examiner.com news service:
• National Real Estate Examiner
• National Consumer News Examiner
• National Offbeat News Examiner

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Landmark consumer protection law heavy with strong mortgage rules

The far-reaching new law creates a new Federal Reserve-based watchdog, the Consumer Financial Protection Bureau to ensure consumers get clear, accurate information necessary to shop for mortgages, credit cards and other financial products.

by Broderick Perkins
© 2010 DeadlineNews.Com


Unauthorized use of this story is a copyright violation -- a federal crime


Deadline Newsroom - President Obama recently signed the landmark H.R. 4173: Restoring American Financial Stability (RAFS) Act of 2010 which, in part, eliminates many of the lax mortgage lending practices that sparked the financial meltdown.

Among its provisions, the far-reaching new law creates a new Federal Reserve-based watchdog, the Consumer Financial Protection Bureau to ensure consumers get clear, accurate information necessary to shop for mortgages, credit cards and other financial products. It also protects consumers from hidden fees, predatory terms and deception.

It's not clear when all the provisions will roll out, but an overwhelming majority of consumers demanded the protections.

Often called Wall Street Reform, the RAFS Act has many provisions for those who live on Main Street, including a national consumer complaint hotline so consumers will have, for the first time, a single, toll-free number to report problems with financial products and services; a new Office of Financial Literacy; and a new U.S. Department of Housing and Urban Development (HUD) Office of Housing Counseling to boost homeownership and rental housing counseling.

The bureau will be lead by an independent director appointed by President Obama and confirmed by the Senate, who will be able to autonomously write rules for consumer protections governing all financial institutions, banks and non-banks, offering consumer financial services or products.

The new director will oversee the enforcement of federal laws intended to ensure the fair, equitable and nondiscriminatory access to credit for individuals and communities.

The new law governs banks and credit unions with assets of over $10 billion and all mortgage-related businesses (lenders, servicers, mortgage brokers, and foreclosure scam operators), payday lenders, and student lenders as well as other non-bank financial companies, including debt collectors and consumer reporting agencies. Banks and credit unions with assets of $10 billion or less will be examined for consumer complaints by the appropriate regulator.

Among it's provisions, the RAFS Act includes help for homeowners and home buyers, including:

• Prohibiting unfair lending. It prohibits "yield spread premiums" and other financial incentives that encourage lenders to steer borrowers to more costly loans and pre-payment penalties that trapped so many borrowers in unaffordable loans.

• Establishing penalties for irresponsible lending. Lenders and mortgage brokers who don’t comply with new standards will be held accountable by consumers for as much as three-years of interest payments and damages plus attorney's fees. The law also protects borrowers against foreclosure for violations of these standards.

• Expanding consumer protections for high-cost mortgages. The new law expands the protections available under federal rules on high-cost loans by lowering the interest rate and the points and fee triggers that define high cost loans. Also, lenders must disclose the maximum a consumer could pay on a variable rate mortgage, with a warning that payments will vary based on interest rate changes.

• Requiring lenders to ensure borrowers' ability to repay. The act establishes a simple federal standard for all home loans: institutions must ensure that borrowers can repay the loans they are sold.

• Requiring additional mortgage disclosures. Lenders must disclose the maximum a consumer could pay on a variable rate mortgage, with a warning that payments will vary based on interest rate changes.

• Emergency mortgage relief. Based on a successful Pennsylvania program, the new law provides $1 billion for bridge loans to qualified unemployed homeowners with reasonable prospects for reemployment to help cover mortgage payments until they are reemployed.

• Foreclosure legal assistance. The law authorizes a HUD -administered program for making grants to provide foreclosure legal assistance to low- and moderate-income homeowners and tenants related to homeownership preservation, home foreclosure prevention, and tenancy associated with home foreclosure.

• Free credit scores. Consumers will get free access to their credit score if their score negatively affects them in a financial transaction or a hiring decision.

President Obama signs Wall Street reform: "No Easy Task"



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You are reading a sample of "News that really hits home!", now available from several beats and published in a growing number of locations.

Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

Perkins was the first Examiner to cover three beats for the Examiner.com news service:
• National Offbeat News Examiner
• National Consumer News Examiner
• National Real Estate Examiner

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Easier access to mortgage, closing costs

Quick! Click my head!

Follow the links and get these documents online anytime, especially before you are in the thick of buying or selling a home in today's market. Getting familiar with the documents now, can save a lot of headaches later.

by Broderick Perkins
© 2010 DeadlineNews.Com


Unauthorized use of this story is a copyright violation -- a federal crime


Deadline Newsroom - Three documents, crucial to the homebuying transaction, give both the seller and the buyer a better fix on virtually all costs they can expect to face during the ordeal.

Including everything from the appraisal fee to the underwriter's portion of the title insurance -- as well as a sort of manual to understand how it all works -- the documents make it easier to calculate, compare and question all the costs associated with the home buying ordeal.

"This is important because whether you buy a mansion or a cottage, you want to know how much your mortgage is going to cost — not just the interest rate but all the fees and charges you’ll have to pay to close the loan" as well as other homebuying costs, writes mortgage maven, Peter Miller, publisher of the Silver Spring, MD-based OurBroker.com

• 1. Under the federal Real Estate Settlement Procedures Act (RESPA), since Jan. 1, 2010, home loan originators must give you the mandated Good Faith Estimate (GFE) within three days of accepting your application.

• 2. At closing, the lender must provide borrowers with the new Settlement Statement HUD-1, the final line-by-line list of mortgage and closing costs.

• 3. Along with the GFE, you'll also receive the new "Shopping For Your Home Loan: HUD's Settlement Cost Booklet" a guidebook to walk you through the other two documents.

Follow the links and get these documents online anytime, especially before you are in the thick of buying or selling a home in today's market. Getting familiar with the documents now, can save a lot of headaches later.

Together, the new GFE and HUD-1 documents make it easier to determine if you are getting the loan at settlement that you were offered in the GFE -- and more.

• First, the three-page GFE, provided by the mortgage broker or lender, shows the loan terms and the settlement charges you will pay if you decide to go forward with a given mortgage. It explains which charges can change before settlement and which charges must remain the same.

Notably, it also contains a shopping chart and worksheets to encourage you to shop around and compare several mortgage loans and the settlement costs of each.

• Next, the HUD-1 is a complete and final list of all your charges and credits. In addition to the cost of the property, your down payment, the financed amount, your monthly payment, and loan terms, it includes your loan type, annual percentage rate (APR), points, commissions, yield spread premiums, originating fees and other loan costs as well as title and escrow fees, closing costs, tax and insurance payments, inspection fees, attorney fees, and information and costs related to rate locks and prepayment penalties -- the works.

You have the right under Real Estate Settlement Procedures Act (RESPA) to
inspect the HUD-1 Settlement Statement before settlement occurs.

You should set aside a full day to see your HUD-1 document at least a day before closing, so you have time to go over all costs, eliminate surprises and ask the lender or other professionals involved any questions that might arise.


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You are reading a sample of "News that really hits home!", now available from several beats and published in a growing number of locations.

Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

Perkins was the first Examiner to cover three beats for the Examiner.com news service:
• National Offbeat News Examiner
• National Consumer News Examiner
• National Real Estate Examiner

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New disclosures help mortgage consumers manage risk

Busty Barbe Q back on the block

"Consumers need the proper tools to determine whether a particular mortgage loan is appropriate for their circumstances." - Federal Reserve Chairman Ben S. Bernanke.

by Broderick Perkins
© 2008 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - The Federal Reserve is gearing up with more consumer protection on the home loan front, as it continues its overhaul Regulation Z.

Regulation Z is the wide-reaching Consumer Protection provision of Truth In Lending law enforced by the Federal Deposit Insurance Corporation.

The ever-evolving regulation mandates certain detailed disclosures by financial institutions in the realm of home loans and regulates certain credit card practices and credit billing disputes.

Disclosures help consumers determine if a given borrowing transaction is right for them. The greatest collapse in the housing and mortgage market in 70 years was due, in part, to consumer ignorance that caused them to buy homes they couldn't afford.

Kid has stars, egg on her face

"Consumers need the proper tools to determine whether a particular mortgage loan is appropriate for their circumstances," said Federal Reserve Chairman Ben S. Bernanke in a prepared statement.

"It is often said that a home is a family's most important asset, and it is the Federal Reserve's responsibility to see that borrowers receive the information they need to protect that asset," he added.

Effective for applications on or after July 30, 2009, first and second home loan customers, as well as those refinancing have a slew of new benefits.

• Lenders must provide you initial truth-in-lending mortgage cost disclosures within three business days of your application. If not, you can back out.

• Until you receive the initial disclosure, lenders can't collect any fees, except for a credit check. Lenders and brokers previously collected appraisal, credit and other charges at the onset of the application.

• A final truth-in-lending disclosure is due three business days before closing.

• Lenders must give you a copy of the real estate appraisal three business days before the scheduled closing. Lenders often failed to informe a consumer of his or her right to a copy of the appraisal. If you never see an appraisal, you have no idea if the home is worth what you are paying.

It's the Nadya Suleman Show!

• The lender can't close the loan until at least seven-days after applicants have or mailed the initial disclosure. That gives consumers more time to mull over the transaction.

• If there's a change that makes the annual percentage rate rise beyond a set level, say because of rising rates or inaccurate initial information, creditors must provide an additional loan cost disclosure and give you an additional three-business-day waiting period before closing the loan.

Round two

Days before the July 30 provisions took effect, the Fed pushed another round of regulatory upgrades into the public comment pipeline, this time for so-called "closed-end mortgages" and home equity lines of credit "HELOC" consumers.

A closed mortgage is a home loan that can't be paid off until its maturity date -- without substantial prepayment penalties.

A HELOC is a line of credit drawn against the equity in your home. You pay back only what you use, unlike an equity loan which grants you a fixed amount upfront and you must begin paying back immediately.

Proposed provisions for these two types of mortgages will be under discussion for at least four months and may not become law until late this year or early next.

Closed-end mortgage disclosures will focus on potentially risky features including adjustable rates, prepayment penalties, and negative amortization (a feature that can cause a loan's balance to rise).

Lenders would have to:

• Improve the disclosure of the annual percentage rate (APR) so it captures most fees and settlement costs.

• Show how the consumer's APR compares to the average rate offered to borrowers with excellent credit.

• Provide final truth-in-lending disclosures so that consumers receive them at least three business days before loan closing.

• Show consumers how much their monthly payments might increase, for adjustable-rate mortgages.

Disclosures, however, aren't always sufficient to keep mortgage consumers out of hot water. Closed mortgage rules would also

• Prohibit payments to a mortgage broker or a loan officer that are based on the loan's interest rate or other terms. Yield spread premiums, mortgage brokers obtained for steering consumers to higher cost mortgages, are targeted by this provision.

• Prohibit a mortgage broker or loan officer from otherwise steering consumers to transactions that are not in their interest in order to increase the mortgage broker's or loan officer's compensation.

For HELOCs the Fed wants to do away with generic disclosures an mandate more specific information about a HELOC that summarizes both the basics and risks at application. Shortly after application, consumers would receive new disclosures that reflect the specific terms of their HELOC.

The proposed rules for HELOCs would also

• Prohibit creditors from terminating an account for payment-related reasons, unless the consumer is more than 30 days late in making a payment.

• Provide additional protections related to account suspensions and credit-limit reductions, and reinstatement of accounts.

During the housing crisis, even consumers with excellent credit had HELOC accounts closed or limits reduced or frozen.


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© 2008 DeadlineNews.Com

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You are reading a sample of "News that really hits home!", now available from several beats and published in a growing number of locations.

Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

Perkins is also the first Examiner to cover three beats for the Examiner.com news service:
• National Offbeat News Examiner
• National Consumer News Examiner
• National Real Estate Examiner

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Update: CPSC opens Drywall Information Center

Another Whopper ad bomb
Hindu blessing meat sandwich

Since its initial findings that Chinese drywall contains substances less present in U.S. drywall or not present at all, the CPSC has worked with its Chinese counterpart to pursue the case after hundreds report the building material is sickening.

by Broderick Perkins
© 2008 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - The Consumer Product Safety Commission (CPSC), recently set up a Web site to keep consumers, drywall manufacturers, builders and other apprised of its investigation into the latest problematic Chinese import, drywall used to build homes.

Drywall imported from China, blamed for rotten egg odors, fast metal corrosion and health problems for some homeowners, contains sulfur and other materials not found in U.S. made drywall, according to preliminary federal tests.

CPSC's Drywall Information Center offers updates (online and via email) on the investigation, help for homeowners trying to determine if their drywall is making them sick, where drywall problems have been reported and other related information.

Preliminary research from the U.S. Environmental Protection Agency found the Chinese-made drywall contained sulfur, which is not in U.S. drywall, but widely used in black gunpowder, matches, insecticides and fungicides.

EPA tests also found strontium, (a metallic element that is highly reactive chemically, including, in a finely powdered state, spontaneous ignition at room temperature) at levels 10 times as high as in U.S. drywall.

The EPA also found two other organic compounds, generally found in acrylic paint, but not in U.S.-made wallboard. They were
• propanoic acid, 2-methyl-, 2,2-dimethyl-1-(2-hydroxy-1-methylethyl) propyl ester
• propanoic acid, 2-methyl-, 3-hydroxy-2,4,4-trimethylpentyl ester.
latest, potentially explosive, problematic import.

Since those findings, the CPSC has worked with their Chinese counterpart, the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) and hope to visit Chinese gypsum ore mining and wall board manufacturing facilities. CPSC also hosted Chinese officials visiting homes in Florida and Louisiana.

Some 36,000 homes in Florida, as well as additional properties in post-Hurricane Katrina Louisiana and Virginia, Alabama, Mississippi and California, were constructed with the Chinese-made material, recently found to be quite different from U.S.-made drywall.

CPSC is also investigating complaints, tracking imports, analyzing health effects, air sampling 50 homes, collecting samples and otherwise pursing the investigation.

The questionable residential building material has been installed in some 100,000 homes nationwide according to U.S. Senator Bill Nelson (D-FL), whose high number of complaining constituents put him at spearhead of an effort to learn more about the suspect drywall.

The case has drawn class action and builder-originated suits against suppliers and manufacturers.

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© 2008 DeadlineNews.Com

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Get "News that really hits home!" for your Web site or blog from the DeadlineNewsGroup.Com.

You are reading a sample of "News that really hits home!", now available from several beats and published in a growing number of locations.

Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

Perkins is also the first Examiner to cover three beats for the Examiner.com news service:
• National Offbeat News Examiner
• National Consumer News Examiner
• National Real Estate Examiner

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