Rate movement is being driven by  generally  weak economic data, including jobs report, unemployment  with an increase from last month's read of 9.7% to 9.8% in September, average hourly earnings and average work week changes and a  plunge in factory orders  0.8% last month,  worse than expectations. October  and November 2009 may turn out to be the months where mortgage rates bottomed.

                                  Frank Ceizyk

The newest lending guidelines have created a wave of new "tricks of the trade", making  it more likely you will be overcharged for a loan, and giving the lenders control of your transaction by potentially holding your appraisal hostage.  Let me explain:

MDIA-The Mortgage Disclosure Information Act:  This basically requires that you have 4 days from your initial application to receive disclosures from the LENDER that are supposed to reflect what your broker initially disclosed on your application. 

THE PURPOSE:  The guidelines are  intended to prevent lenders from charging "more" at the end of a transaction, and then trying to strong arm you into signing.  If the APR on the final cost estimate exceeds .125% of your original, the lender gives you 7 days to decide if you want to cancel.

THE TRICK: This guideline encourages lenders to "overdisclose" on your initial application.  Customers are being told that it is just an initial disclosure, and the final rate/fees will likely be lower.  However, they are not bound by anything to honor an oral agreement to lower your rate at a future date, so if you signed the initial application with the fees purposely overdisclosed, you're stuck!

HOW TO AVOID THE TRICK:  Don't sign an initial application if it has been "overdisclosed".  Don't accept any oral commitment to "float" your rate down.  Unless it's in writing, the lender is legally able to charge you a higher rate at closing.  If a lender refuses to send your lock-in terms in writing, send a nice letter to the Department of Financial Institutions-or at least threaten it.  If they suddenly change their tune, you should change lenders.

 HVCC-Home Valuation Code of Conduct: this requires a "roulette" style assignment of an appraiser to prevent mortgage, real estate and consumers from influencing an appraiser to "hit" a certain value.

THE PURPOSE:  The guidelines was intended to prevent large real estate and mortgage "under one roof" shops from retaining in house appraisers that could (and very often were) influenced to obtain values to enable financing and purchase transactions to be completed.

THE TRICK: Each lender has created their own "AMC"-Appraisal Management Company, with their own "approved" list of appraisers.  The guideline says that each lender must transfer the appraisal to another lender if the consumer requests.  The problem: The lenders will not ACCEPT an appraisal done by another lender's AMC, which means if for any reason your loan is declined, and/or your mortgage loan professional doesn't honor the rate they quoted, your only option is to buy a new appraisal with a new lender!! 

HOW TO AVOID THE TRICK:  Get your credit approval (providing all income, asset information up front) done before you authorize the appraisal be ordered, and get your lock-in quotes in writing.  If you don't get what you were promised in writing, send all your documentation with a nice letter to the Department of Financial Institutions.

 Many more changes are coming, many new programs are being created, and as always, I am here to answer questions you may have in the constantly evolving world of mortgage finance.

 

Simply explained, a reverse mortgage is an FHA loan a homeowner takes out on his house. The homeowner must be 62 years and older, own his house and live there for the majority of the time. Counseling is critical to the process  and is done by the broker  and professional non profit third party  counselors to make sure the senior,  his or her family and any advisors understand the loan  program.  When applying for a reverse mortgage, the amount you will receive will depend on your age, the interest rates in effect at the time of your application, and the value of your house. You have fixed and adjustable rate options. You have the choice of receiving the loan in one lump sum, in monthly instalments, in the form of a line of credit or as a combination of the first three option.

Unlike a regular or traditional mortgage, a reverse mortgage does not require you to make monthly payments and there is no quailfying. Any existing mortgage will be paid cloosing.  The loan must be paid in full once you sell your house or no longer use it as a principal residence. This makes owning your house longer a feasible alternative - you never run the risk of losing your home provided you pay the appropriate property taxes and insurance.requirements.

 

The reverse mortgage can also be used for a home purchase.  Our Heartland Reverse Mortgage Advisor welcomes your questions.   Following is a link to the HUD site for more detailed information ..