Is Bank of America Charging Hidden Home Loan Termination Fees?

According to the firm of Meiselman, Denlea, Packman, Carton & Eberz before the recent economic meltdown, many home buyers who were not able to qualify for standard mortgages were approved for so-called sub-prime mortgages with very high interest rates. Of course, many consumers intended on refinancing at a better rate as soon as they could, and to profit on that expectation, lenders included an “early termination fee.” As a result, consumers who wanted to refinance had to pay a penalty for the privilege of doing so. While this penalty may have been unfair and usurious, it was typically disclosed to consumers.

In the aftermath of the mortgage crisis, most sub-prime mortgages, and their early termination fees, have disappeared. However, at least one huge mortgage lender, Bank of America, may be illegally and surreptitiously adding on early termination fees when its customers sell their homes. At least one consumer discovered that Bank of America had added a $300 early termination fee on the HUD settlement statement the consumer received immediately before closing on the sale of his home. Not only was the fee not authorized or disclosed to the consumer when he refinanced his home, but it was imposed on his home equity line of credit. Of course, a line of credit is typically an interest only loan of infinite duration – by definition, there can be no “early termination” because there is no loan termination or completion date.

Something to keep in mind if your seller is paying off a B of A mortgage.

Mortgage Payment Cheaper Than Rent in Kentucky

What Payroll Reduction? Homebuyers to Pay the Cost

When President Obama signed into law the Temporary Payroll Tax Cut Continuation Act he put the cost of the reduced payroll tax cut on homebuyers by increasing the guarantee fees on new mortgages.

The amount of the guarantee fee increases will be included in future mortgage rates. In the past all guarantee fees collected by the agencies were held in separate guarantee pools. The increased fee will go straight to the General Fund. Several elements in the bill are not quite clear and may take weeks or months to determine.

The primary questions are:

1. How much will the Fannie and Freddie g-fee rise? The Act calls for a minimum increase of 10 basis points, but the amount of the increase is to be determined by FHFA. The early expectation from insiders is that the increase will be 10 basis points. An enactment date hasn’t been determined yet.

2. Will the increase in guarantee fees hit all at once? The Act says the FHFA may phase in the increase over a two-year period. This could make the initial effect on mortgage rates fairly small. However, the FHFA could make the increase applicable all at once.

3. How much will the FHA’s annual insurance premium increase? This is the easy one. The answer is 10 basis points. Date of enactment is not clear.

Everyone knows the housing industry carries the economy into and out of a recession. Why is it that the one thing that can boost the economy the quickest is being burden with too many regulations and additional fees?

The other sad part is the American public thinks they really got a tax reduction. So much for transparency

December Sale of The Month

Previously described as the “mack daddy” of Penthouses in Miami Beach- Penthouse ‘A’ at The Setai South Beach closed yesterday for a record-setting $21.5M.

To see the interior photos and learn the rest of the story go to http://bit.ly/tGlN6l

This Graph Alone Explains A Lot of This Country’s Problems

CLICK GRAPH TO ENLARGE

Anyone But a Legislator Could Understand This!

What Could Be More Simple To Understand Than Simple Math?

All these “smart???” legislators seem not to understand the basics of economics and why the US is in financial trouble.

Simple Math – The US Problem in a Nutshell

* U.S Tax revenue: $ 2,170,000,000,000
* Fed budget: $ 3,820,000,000,000
* New debt: $ 1,650,000,000,000
* National debt: $ 15,000,000,000,000
* Recent budget cut : $ 38,500,000,000

Now let’s remove 8 zeros and pretend it’s a household
budget.

* Your income: $ 21,700
* Your House Hold budget: $ 38,200
* New debt: $ 16,500
* Your Credit card debt: $ 150,000
* Recent budget cut : $ 385

We All Need Free Money For 99 Years

In some parts of the country it has been a practice of some HOA and Condo Associations to collect a “resale fee”, now sometimes called a “flip fee”. Basically the current seller of a unit in these Associations had to pay a fee (typically 1%) every time the property sold. This fee went to the common area maintenance which kept the monthly fees down in theory.

Now builders have decided this is a good idea and in some parts of the country have been implementing the same type fee. Everytime the house is sold the seller must pay the builder a “flip fee”. This goes on for 99 years. The funds go straight to the builder and in no way benefits the neighborhood. It is just residual income to the builder for his life and the life of his heirs.

We all need a deal like that. Fortunately it hasn’t caught on in Kentucky.

FannieMae’s New Website For Distressed Homeowners

Fannie Mae (FNMA) launched a new website Tuesday aimed at helping distressed homeowners understand their options whether they want to stay or leave their current home. The website is

www.KnowYourOptions.com

The website is very user friendly and highly interactive. Through a virtual assistant the homeowner is able to look at several options and get a better understanding of the industry terms that most consumers don’t understand. The bottom line is the site prepares the homeowner to talk intelligently with their lender or instructs them on how to seek help from free counseling.

I think this website will have a greater impact in helping the homeowner than almost any mortgage program that has been announced.

New HUD Policy Will Expedite Foreclosure Resales

Effective February 1, 2010 the Department of Housing and Urban Development (HUD) will relax FHA rules that prohibit insuring mortgages on homes that are owned by the seller for less than 90 days – a move that could help expedite the rehabilitation and resale of foreclosure properties.

In a housing market where tighter lending requirements have made FHA financing the only option for some buyers, this 90-day policy has (1) kept some homebuyers from being able to purchase affordable homes and (2) prevented the quick resale of foreclosed properties, which affects the ability of communities to stabilize and rebuild.

Research has shown that the buying, fixing, and reselling of foreclosed properties is often achieved in less than three months time.

The temporary waiver, which will expand access to FHA mortgage insurance to many, will be in effect for a period of one year, unless extended or withdrawn by the FHA. With this in mind, now may be an excellent time to contact clients who have recently purchased a foreclosed property and those who may be on the fence about purchasing a foreclosure as a short-term investment.

"FHA borrowers, because of the restrictions we are now lifting, have often been shut out from buying affordable properties," said FHA Commissioner David H. Stevens. "This action will enable our borrowers, especially first-time buyers, to take advantage of this opportunity."

To ensure FHA borrowers are protected from inflated prices, the policy has certain restrictions, including:

· All transactions must be arms-length and there can be no identity of interest between the buyer and seller.

· If the sales price of the property is 20 percent or more above the seller’s acquisition cost, the lender must meet specific conditions for the waiver to apply.

· The waiver is limited to forward mortgages, and cannot be used under the Home Equity Conversion Mortgage (HECM) purchase program.

A Little Humor Regarding The RESPA Changes

This poem is making the rounds in the mortgage and title communities. Enjoy and best wishes for a happy and prosperous new year!

T’was the week before New Year’s

When all through the lands,

LO’s and Closers were wringing their hands.

RESPA changes are coming,

They all started to worry,

We’d better get trained, and get trained in a hurry!

We all kept on hoping

There would be a delay.

But HUD said, “No Way,” it’s all here to stay.

“We love our new HUD

And our new GFE,

Don’t fret, don’t worry, it’s as simple as can be.”

We all shook our heads,

Threw our hands to the sky.

What were you drinking? You must have been high!

You took a one page doc

And changed it to three.

Easier? More simple? How can that be?

The Regs don’t match up,

So now what do we do?

HUD says, “No comment, It’s all up to you.”

No info on TILA,

HMDA, REG B.

We are totally confused, why can’t they see??

In a time when some borrowers

Think lenders are scary,

You’ve given 3 pages to make them more wary.

This doesn’t make sense,

Not one little bit.

We are all trying hard to not throw a fit.

So we will all do our best

To put borrowers at ease.

But make more reform, please, please, please!

Please bring someone in

Who knows just what to do.

What is best for both borrowers AND lenders too.

We are all still waiting,

Though not holding our breath

And hoping the government doesn’t “Reg” us to death.

So, on this week before New Year’s,

I’d like to wish you

Good luck with RESPA, I need it too!