Mortgage Blame Game
Some interesting articles and correspondence have come my way lately. A client of mine that works in the Insurance field sent me the following article and I thought it apt to be posted here. (Thanks Phil)
Some banks are confusing the home mortgage amount with the replacement value of insurable buildings. In other words, some banks are requiring insurance on the total mortgage amount instead of just the structures. This is against the law.
Per Florida Administrative Code 69O-167.009, citing specific authority of 624.308(1) FS. Law Implemented 624.307(1), 626.9551(1):
No mortgage lender shall, in connection with any application for a mortgage loan in this state which is secured by a mortgage on residential real estate located in this state, require any prospective mortgagor to obtain by purchase or otherwise a fire insurance policy in excess of the replacement value of the covered premises as a condition for granting such a mortgage.
Another worthwhile article…
MORTGAGE REGULATIONS
The Federal Reserve issued new guidelines, effective Oct. 1, to curb shady lending practices. “It seems clear that unfair or deceptive acts and practices by lenders resulted in the extension of many loans, particularly high-cost loans, that were inappropriate for or misled the borrower,” says Fed Chairman Ben Bernanke.
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This one from a colleague in ActiveRain.com, in regards to how some want to point the blame to the real estate practitioner for the mess (Lenn Harley, Broker, Homefinders.com in Maryland and Virginia)
IT’S A MORTGAGE MESS, NOT A REAL ESTATE MESS. A DEFENSE OF REAL ESTATE AGENTS
Tags: mortgage, real estate
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July 22, 2008 at 5:56 am
so fha lending is the best way to go today?
I know just about hard money lending and it works good for me, but I would like to know more about fha loans.
July 22, 2008 at 5:58 am
Fha loans are the only way to go today, banks don’t want to get loans to anyone.
Did you hear that most banks don’ want to do any wholesale loans anymore?
July 22, 2008 at 2:13 pm
While I don’t specialize in financing and don’t claim to be a mortgage broker, I can say personally that I did an FHA loan in 1998 on my first home with 3% down and used some 401k money (without penalty) and it worked out great. A lot of records and paper work was involved but it was worth while to get in as a first time homebuyer. Otherwise, my wife and I would not have been able to finance our first home. I was able to have gift money contributed by family. Later we refinanced (without tapping equity) to a lower rate of 5.25% and thats the rate we are at today as we still own the home and have it rented out.
I tend to think that there are many first time homeowners out there not aware that they could be in a better position to buy a home with this type of financing with very little down. I have friends in financing that have said they are able to get 100% financing for buyers with great credit and low debt to income ratio’s for FHA loans. In my opinion, it’s a nice program.