Upside Down Mortgage

Archive for April, 2009

Obama Subprime Loans

Question: Obama & Acorn forced banks to give subprime loans?

Since Obama forced banks to offer subprime loans to minorities in Chicago shouldnt we blame him for being part of this supposed "predatory" lending problem? And since he was taking so much money from Freddy and Fannie, should he be investigated for his role in this whole mess?

Answer: Yes and just recently the Obama campaign paid $832,598 to ACORN to facilitate their Project Votes initiative. ACORN has a long history of voter fraud and is currently under investigation in several states for voter fraud.

Democrats and organizations like ACORN forced Fannie Mae, Freddie Mac and Banks to meet a quota of sub-prime mortgages or pay big penalties. So to comply with their quotas they made mortgages affordable by using schemes like:

"100 percent financing . . ."
"No down payment . . ."
"Interest only loans . . ."
"No income . . .
"No job . . ."
"No assets . . ."
"No credit scores . . ."
"Low credit scores . . ."
"No SSN required . . ."
"ITIN identification accepted . . ."
"Undocumented income . . . even if you don't report it on your tax returns . . ."

There was no question that the lenders were threatened with charges of violating the CRA if they didn't make home loans to people with poor credit ratings. Community activist groups like ACORN patrolled the lenders to make sure that unqualified buyers could get loans. When Obama was a lawyer/community activist he represented ACORN and sued Fannie Mae to reduce the requirements for getting mortgages. So the lenders complied and loaned to high risk buyers. As any banker will tell you, your credit rating determines your interest rate. So these high risk buyers wound up with adjustable rate mortgages (ARMs).

Re: Barack Obama Trained ACORN Staff In How To Intimidate Banks Into Giving Subprime Loans. Barack Obama—A Thug With A Law Degree

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Loan Modification New Law

Question: I need help with laws in Washington state having to do with disabled people and modification loans/foreclosure?

Is there a law in the state of Washington that states that the bank cannot take away a home or put it on foreclosure if a disabled/ handicapped person lives in that home? If so, where can i find this law?

Answer: I found the link to the Washington Attorney General's Office. Though it sounds like it's more like you would turn up some financial aid to keep you afloat.

There is a lot of foreclosure prevention help available these days, best to start with the government institutions that aren't trying to make a buck off you.

FTC To Ban Upfront Fees On Loan Modifications

Subprime Lending Ethics

The most recent regulatory report on subprime lending is the Statement on Subprime Mortgage Lending (June 2007). This 31-page document was released by the Federal Reserve and other federal financial regulatory agencies in response to the current out-of-control subprime lending market. It describes in detail the requirements made of subprime lenders for the financial protection of both the borrower and the lender.

The first issue of concern is improved communication to subprime borrowers about the real, hidden cost of their adjustable rate mortgage (ARM) loans. This kind of loan is often suggested to subprime borrowers because the introductory rate of interest is so low – so low, in fact, that it’s often called a “teaser rate”. Before the appearance of the government Statement, ARM loans assessed huge penalty fees for refinancing the loan or prepaying it before the term expires. Often, the penalties continued for most of the duration of the loan.

Regulators tighten rules for subprime lending in the Statement by providing guidelines requiring subprime lenders to offer full disclosure of fees and rates associated with an ARM. Moreover, they state that “liar loans,” loans that ignore a borrower’s capability of repaying the loan and require no documentation of earnings, must be curtailed. These liar loans are also called “stated income loans,” “low-doc loans,” and “no-doc loans.” A borrower simply states the amount of his income, without being required to produce a W2 form or pay stubs to substantiate his statement. Based on what he has claimed, he qualifies for a loan he cannot really afford. It’s clear that this practice is the cause of at least part of the subprime market problem!

The Statement is specific about predatory and deceptive lending practices – what they are, and why they must not be used. Such predatory practices often victimize those who may not really understand what they are being asked to sign, members of particularly vulnerable groups: the elderly, minorities, and first-time home buyers. It is also very clear about the fact that not all subprime lenders can be considered predatory.

If you are a subprime buyer, what do these new regulations mean to you? For one thing, you can’t be entrapped in an ARM with an upcoming reset date: 60 days notice is now required. If you decide to refinance early in the loan, or if for some reason you become able to repay it early, no astronomical prepayment fees will be assessed. Lenders must now require proper documentation to verify income. This is a positive improvement, because a subprime borrower should never borrow more than he will really be able to repay. Many subprime financial institutions have gone under in recent years, simply because they ignored the critical need to determine accurately each home buyer’s capability to meet financial obligations. The regulations force subprime lenders to deal more ethically with subprime borrowers. They must show due diligence with their determination of these borrowers’ future solvency. Foreclosures ruin local real estate markets, as well as borrowers and lenders.

Earlier guidelines issued by the regulatory agencies have been tightened by the Statement. Some have been incorporated into its text; others, like the 2001 Expanded Guidance, are referenced. The intention of the federal agencies in tightening the rules for subprime lending is to protect subprime borrowers from lenders of questionable integrity, and to protect lenders from ruining themselves because of laxity in their underwriting practices. This document is bound to have a positive effect on the current downward-spiraling real estate market.

About the Author:

Learn When Did Subprime Lending Start and all the chaos as well as learning more about Expanded Guidance For Subprime Lending Programs when you visit http://www.subprimelendingcrisis.com.

Article Source: ArticlesBase.com - Subprime Mortgage Lending - Regulators Tighten Rules

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