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FBI Reports Mortgage Fraud Is On The Rise

from our BLOG

As if struggling homeowners don’t have enough to worry about: the Federal Bureau of Investigation (FBI) is reporting that mortgage fraud is on the rise. The FBI says that consumer complaints are now coming in at a record pace, underscoring the seriousness of the problem.

The FBI reports receiving 46,717 Suspicious Activity Reports related to mortgage fraud in 2007compared to 35,617 in 2006 and just 6,936 in 2003. Although just 7% of the reports cited an exact dollar loss, the total reported losses for 2007 was $813 million. The FBI says that their case load for mortgage fraud increased 47% in 2007 over 2006.

Citing the continued housing slump as one of the reasons for increased fraud, the FBI says that the current market is “…further incentive for shady real estate industry insiders to look for dishonest ways to turn a profit and growing opportunities for scam artists to prey on vulnerable homeowners.”

The FBI has identified the top 10 hotspots nationwide for mortgage fraud, which were carefully mapped from multiple public and private sources: Florida, Georgia, Michigan, California, Illinois, Ohio, Texas, New York, Colorado, and Minnesota. The north-central region of the US had the largest share of mortgage fraud, followed by the west and southeast regions.

Among the current mortgage scams the FBI has cited the following:

• Builder-bailout” schemes where developers unload excess inventory through financial trickery.

• Foreclosure rescue frauds that trick homeowners into signing over the deed to their house.

• Seller-assistance scams that use false appraisals to sell homes.

• Identity theft that leads to home equity credit lines being opened and drained.

05-/08 home financing

 

Mortgage Lending Tip

for the weeks of: Jan 29

Getting Into Your Home FAST!
Most lenders require 20% down on the home purchase price before they will qualify you for a mortgage loan. But in some cases, you can apply for "zero down" if you meet certain criteria. See how you can get into your home fast without waiting to raise the necessary 20% down.

Weekly Tip:
get more information about zero down mortgage loans

Those Nasty 'Garbage Fees' At Closing!

from our BLOG

You’ve found the house that you want, have arranged financing, and are preparing to go to closing. Several years of scraping by has put you in the position to finally switch from being a renter to becoming a homeowner. Nearly every dollar saved has been set aside for the down payment with closing costs also covered.

At least this is what you would like to think.

Future homeowners are sometimes surprised to find that certain ‘garbage fees’ have been added on to their closing costs. Not the fees to pay the lawyer or the lender only, rather typically smaller, but still costly fees which can add up when tallied together.

If you didn’t pay close attention to the initial estimate of fees you were given when you purchased the home, then your closing costs are probably higher than you had expected. A shocking surprise and a possible hardship as well.

By law, mortgage lenders are required to disclose fees charged in connection with obtaining a mortgage. They have three days to get this information to you once you have submitted your loan application.

The fees listed, however, are only an estimate, meaning your costs could actually be higher.

Points and title insurance are two ‘garbage fees’ most consumers know about, but there are also fees for flood certificate, courier, tax service, notary, wiring, and more. Processing and documentation fees are also charged and your local tax jurisdiction may charge a filing fee too. In addition, if you change the type of loan you want after submitting an application, expect to be charged for that too.

To avoid surprises, make sure that your mortgage lender provides final notification of fees prior to closing. Have duplicate fees removed and, if possible, ask if some (if not all) fees would be waived — many lending institutions are now waiving some or all fees in a bid to attract new business.

Enjoying your new home shouldn’t be tempered by fees which can add hundreds of dollars to your closing costs.

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05-/08 home financing

 

When To Cancel Private Mortgage Insurance

from our BLOG

Private Mortgage Insurance (PMI) is a type of insurance required by lenders when you purchase a home with less than 20% down. If you cannot come up with enough money to meet the 20% threshold, you can usually still get a mortgage but the lender will want to protect themselves by requiring that you obtain and pay for PMI.

Lots of homeowners dislike PMI, seeing it as an added cost to homeownership. Some consumers are also unaware that PMI isn’t for the life of the loan, that it can be cancelled at some future date.

How To Cancel PMI

• Your PMI should automatically go away when you have paid down your mortgage to 78 percent of the value of your loan according to the terms of the 1998 Homeowners Protection Act (HCA). With certain high risk loans the threshold is 77%; in either case PMI must stop soon thereafter with excess insurance premiums returned to you.

• PMI can also be canceled if your home’s value has increased to the point where your equity in the home is at least 20%. Provided you have been making payments on time and are current with your loan.

When PMI Won’t Die

You may still be paying PMI beyond when you think it should be cancelled if:

• Your home’s value has actually declined. With some areas of the country experiencing a housing correction, your home may now be worth less than what you paid for it.

• There is a second mortgage on your home. If you took out a small equity loan/line of credit (second mortgage) on your home, you’ll still need to pay PMI for the first mortgage until the second loan has been paid off.

One more thing — you may need to obtain (and pay for) an independent appraisal to verify your home’s value before PMI can be cancelled.  Only after confirmation is received and everything verified will PMI be removed once and for all.

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03-/08 home financing