News from Inman News: Consumer Protection Bureau Updates

Mortgage Loan Fraud Assessment based upon Suspicious Activity Report Analysis (Photo credit: Wikipedia)

Integrated RESPA, TILA disclosures coming this fall

Seal of the U.S. Securities and Exchange Commission. (Photo credit: Wikipedia)

Inman News

The Consumer Financial Protection Bureau expects to complete a rule integrating and streamlining federal mortgage disclosures. Borrowers currently get separate disclosures under the Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA).
“Pending the results of additional testing, we expect to issue the final rule this fall, although we would not expect any implementation work to begin until” after January 2014, the bureau said this week in a semiannual update of its rule-making agenda.
Also on the bureau’s agenda: clarifications and amendments to several mortgage-related rules mandated by the Dodd-Frank Act, most of which are slated to take effect in January 2014. Source: consumerfinance.gov.
Copyright 2013 Inman News

 

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Backing the American Dream: Sunday Morning Thoughts 23 December 2012

As a private lender of mortgage notes, one can find a way to make the American Dream of Home Ownership a reality once again. 

The banks are still having tight credit restrictions, and good people with good credit are finding it hard to get a purchase loan whether first time buyer or second purchase.  Although on the flip side of the coin, at present, refinance and reverse mortgages are a booming industry for the banks; which makes this a lucrative time for small lenders and lender groups to capitalize on a much-needed product, single family purchase loans.  There are considerations to make such as usury laws, which are the interest rates a lender can charge.  The average institutional bank interest rate for a 30 year mortgage is 3.125% and for 15 year loan the rate is 2.75%.

When considering lending to consumers and investors, usury laws prohibit going above a set limit for some states.  In general, the set limit for most states is 10% for other states the limit is a little less at 8%.

Many hard money lenders are within the guidelines of lending but they are navigating in tricky waters.

With real estate showing signs of a slow recovery in many areas, and institutional lenders implementing tougher credit restrictions, the time for private lending is now.

So, where do you find qualified borrowers?

Believe it or not, people who had the interest only loan and lost their homes after the loan reset.  Many of the families with the interest only loan were banking on being able to refinance the loan into more reasonable payments than the reset payments.  But the problem, a story we all familiar with by now, the value of homes had dropped drastically in most areas, and most home owners were faced with one added dilemma, being upside down on their mortgages.

Under water mortgages, loan resets, and the added frustration of denied loan modifications only has made private lending necessary and lucrative for a real estate recovery.  Getting involved is easy, fill out the form at the bottom of this article for more information on becoming a private lender.

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Invest in American Real Estate: Sunday Morning Thoughts 31 October 2010

In the not so distant past American real estate was hitting all time highs in almost every area.  Today we are seeing all time low’s in those same areas that once had great appreciation.

 

What caused the shift you may ask?

 

Well, unless you have not been living in the country nor have an affinity for American news you would be clueless to the opportunity which awaits you.  With so many foreclosures on the horizon, housing in most American communities has before affordable and profitable again.

 

Buying a foreclosure or pre-foreclosure is one way to make money in this recovering economy.  If you were to consider purchasing a short sale, consider purchasing it all cash which gives you the ability to purchase at a lower price.   Once purchased you could either sell it for a profit to another buyer, or rent it out and gain equity while waiting out the recovery.

 

So let’s say you have a home with equity of $250,000, you could use the equity to purchase a home in pre-foreclosure or a foreclosure.  The equity usage could be in the form of refinancing to cash out or a line of credit.

 

What if you did not intend to own the property but want to still make a profit from this American recovery?

 

You could use a line of credit or the cash out to become a private lender.  Being a private lender gives all the benefits without the headaches.  You lend money; receive interest without ever having to own the property.  Being a private lender is less of a liability position.

 

But also keep in mind when becoming a private lender the money does not go in the hand of the buyer.  The money goes to escrow for a specific property.  This way, you can have your cake and eat it too, without losing in the end.

Flip Flop with no Collateral

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Well the real estate schemes continue, even in this depressed real estate atmosphere.  Different individuals who call themselves investors are actually charlatans.  The latest foreclosure scheme is a type of mortgage fraud.

The real estate pump and dump is similar to what is perpetuated in the stock market.

Buy a property at a foreclosure auction for a very low price then mortgage the property for the median value, but making the claim to do much needed renovations to the property.  Then reselling the property for market or higher than market value.  When all along the purchaser and buyer are the same entities or persons.  In the end, walking away from the over inflated mortgage, never paying one red cent, causing the property to go into foreclosure.

Not only is this tactic mortgage fraud, schemes like these are also making our national recovery and banking reform lag.  These schemes hurt neighborhoods by causing an abnormal amount of foreclosures in an area, making their home values drop.  This type of mortgage fraud can also make lenders scrutinize all mortgage applications with even more stringent rules, fearing backlash from rampant foreclosures or the FDIC.

From an investors point of view, you should care because this type of activity can cause one to think an area is improving or going through regentification when in actuality it is not.  This is another reason for doing due diligence when considering an investment.

This reinvented scam along with the defrauding of consumers dealing with foreclosure is only going to make the national recovery take longer.

Don’t get me wrong, there are many real estate investors and limited liability companies who are out to help improve the current real estate conditions.

These are the companies that do not give guarantees of stopping a foreclosure nor do they charge fees to help those in foreclosure.  They are the companies that will tell a home owner facing foreclosure their options to stop or avoid their foreclosure.  Some times those options are not what the home owner would like to hear, but it’s better than a foreclosure.

As far as mortgage fraud goes one would think the banks would be able to run a demographic profile to find out the median income in an area, and if the median income can support the house payment then the deal presented has a better chance of not being a scam.  I would think the banks would also look at the comparable homes within the same neighborhood before allowing a disproportionate loan on a specific property.