Leslie Eskildsen asked:


Finally, a reform bill that puts the responsibility where it belongs – back in the lap of the lender. By toughening some of the old rules, and adding rules that should have been there in the first place, this bill makes the lender more accountable when it comes to negotiating a mortage.

The ominous sounding “Mortgage Reform and Anti-Predatory Lending Act of 2009″ introduced by the House Services Committee is moving ahead after a successful 45-19 vote. It still needs be cleared by Senate and signed by the president before being enforced.

If it seems that this bill is moving quickly, it is. Over 2 million subprime mortgages are expected to reset to higher interest rates in the next 18 months, and this reform will be part of the action implemented to reduce the resulting national fallout.

Here are some of the highlights of this bill:

Licensing for mortgage brokers and bank loan officers will become standard.

Previously, larger incentives were paid out to mortgage brokers for securing higher rate or higher risk mortgages; with the new bill, no incentives can be attached to the interest rate or type of mortgage.

Mandatory quality control for mortgages on a national level will be enforced. Standard rules will include encouraging lenders to provide long term, fixed-rate loans with consistent market rates, instead of low interest introductory rates or negative amortization. It will also hold lenders accountable to find terms and rates that are appropriate for the individual borrowers and their ability to repay. Lenders will also be required to offer the option to choose a loan without a prepayment penalty. Mandatory arbitration clauses in most mortgages will also be removed.

If a borrower’s rights were not considered according to the rules of this policy, they would be eligible to cancel their loan contract and receive a refund of all payments, fees and legal costs. If a borrower committed fraud or was untruthful about their situation when applying for a loan, they would not be eligible for the same recourse.

Lenders offering anything other than a 30-year fixed-rate loan, is required to maintain a minimum 5% investment in the loan until it is paid off. If it goes into default, they would own part of the loss. Today, lenders simply sell off the loans and walk away. The intention here is to discourage fly-by-night lenders or those offering low introductory rate sales or promotions to entice buyers. Many believe this will put a strain on the smaller mortgage companies, having to set aside securities to cover any potential losses.

Anyone considering refinancing will have to pass a “net tangible benefit” test that indicates that the borrower will be better off financially with the new loan.

Stay tuned for more details. In the meantime, watch for the latest “Credit Card Reform Bill that recently squeaked through the U.S. Senate Banking Committ on a 12 to 11 vote. Although many believe this is an area in dire need of reform, there is the question that it will make it even harder for the average consumer to get credit approval.



RUFUS

Bruce Jardin asked:


Are you in the market to refinance your mortgage? Most likely, you’re searching for information and analyzing about how to go about refinancing your mortgage. All homeowners know that the lower your interest rate is and the more secure and stable your lender is, then the better your refinance will be. However, there are some additional tips that can help you and this article will discuss them.

You may be like most homeowners in knowing that it can be difficult to determine when to refinance your mortgage. At times, refinancing can offer financial benefits for the home owner. But, at other times, doing so can be counterproductive. If you do decide to refinance your home loan, then consider the following points:

* How much equity you have in your home, currently

* If you want cash back from the mortgage refinancing your mortgage

* Do plan on living in your home for a long time

* Are paying a PMI (Private Mortgage Insurance), currently

* If you refinance, how much lower of an interest rate will you be able to get

* How much will any and all closing costs and fees be

Above, we discussed if it is a good time for you to refinance. In the following section, we will discuss if your financial situation can allow you to afford adjust your home loan. Here are some important points to consider:

* Ensure that you are aware and up to date with the latest and most current interest rates. Homeowners with an ARM (Adjustable Rate Mortgage), can benefit greatly by refinancing into a lower, fixed rate interest mortgage that will save you thousands of dollars and provide some stability in the short and long term.

* With the exception of getting a lowered interest rate, refinancing a home loan will cost you more in the long run than your current mortgage would, and requires higher monthly payments.

* If you do not plan on living in your home for much longer, then refinancing may not be a good idea. You’ll just waste time and effort. * If you need cash and have equity in your home you can get a cash out refinancing. Make sure to carefully examine the situation though prior to drastically changing your mortgage.

A lot of people who own homes believe that they should not refinance a home loan unless they can get a 2% or greater interest rate deduction. But that is not true at all say the loan consultants that handle Jacksonville mortage refinancing cases. They state that people refinance their mortgages for all types of reasons, and a 1% reduction in interest rates can provide a noticeable savings to homeowners.



HERBERT