edited title for accuracy - ed

Long overdue.

Chicago Tribune:

Sen. Barack Obama (D-Ill.) proposed a sweeping set of federal reforms Tuesday to combat mortgage fraud, ratcheting up enforcement and creating a national database of brokers who have been disciplined.

Obama's bill would increase funding for federal law enforcement programs, create new criminal penalties for mortgage professionals found guilty of fraud and require industry insiders to report suspicious activity.

Mortgage fraud is "robbing thousands of Americans of their dream of homeownership, and costing the mortgage industry hundreds of millions of dollars each year," Obama said. "Congress needs to come to the table and do its part."

Tags: mortgage fraud legislation fbi

Which Loan is Best For me?

by Matt Killikelly

As the competition in the lucrative mortgage market increases lenders are offering more niche market products, which target transactions outside the norm, to gain an edge on their competitors. This influx of specialized products creates wider loan availability to borrowers than ever before; increasing the possibility to each individual borrower that a product exists that really serves their needs perfectly. Obviously, these products present a a benefit to borrowers when applied to the proper situation. However, this same range of products that bring benefits to clients can also make a consumer’s head spin. Without careful consideration and good guidance a borrower could end up with a loan that simply does not suit their needs. With the dizzying array of loans available to choose from consumers are faced with a difficult choice when selecting which mortgage loan is right for them. A bad choice made on the loan program can cost a borrower immensely. What's worse, is that the problems can occur at either end of the spectrum, when a borrower or loan officer is too aggressive, or so careful that they cost themselves money.

Tags: mortgage loan comparison fixed adjustable option interest-only

Should Borrowers Pay Points?

by Matt Killikelly

Many borrowers ask the question: Is it in our best interests to pay upfront points when buying or refinancing a home? Short answer: it depends. There is no hard and fast rule.

It’s a shame that many misguided “rule of thumb” answers are still circulating at the family barbeque or being touted within the trusted walls of the accountant’s or attorney’s office. The real answer depends mostly on the borrower’s plans for remaining in the home and their budget. There is a simple test that a borrower can conduct themselves to see what’s best for them. Read on.

Tags: mortgage upfront points buying rate

A Realtor's Most Valuable Alliance

by Matt Killikelly

Everyone who has ever sold real estate, or sold anything for that matter, knows just how challenging the world of sales can be. A realtor is faced daily with demands of buyers and sellers, deadlines and contracts, along with doing everything else it takes to be successful in our field. Of course most people would not sign on for such a high stress occupation without the strong incomes that reward those who perservere at such a demanding job. Let’s face it; many people are simply unwilling or unable to do what it takes in spite of the great compensation available to those few who succeed. For those who go on to become top producers in the field there are some secrets learned along the way that allow us to maximize our efforts in a number of areas. One way realtors can do this is to form alliances in related industries, such as the mortgage field, which can help make the most of opportunities and actually result in a higher income. We’ve all heard that eighty percent of the sales are usually made by twenty percent of the sales people, and forging alliances with strong mortgage professionals is an important ingredient in the recipe for success.

Tags: mortgage realtors sales partnership

What is a bi-saver mortgage?

by Matt Killikelly

A bi-saver takes an existing loan and essentially forces the borrower to pre-pay principal toward a loan in order to shorten the term.

There are two issues I do not like about bi-savers. First, bi-savers usually have a fee attached, anywhere from $200-$600 yearly for the servicing. The second issue is the way they are sold -- most customers don't realize that it's not the fact that the payments are made bi-weekly that makes them save more, it's the fact that by paying bi-weekly the client actually pays more money towards their mortgage over the year and that's what makes the savings.

Tags: mortgage pmi bisaver amortization

The Qualifying Process: What the bank needs to know to price your loan

By Matthew Killikelly

Borrowing money is different than other financial transactions in that the risk to the lender is ongoing so long as the loan exists. This means that the bank's profit margin is not calculated solely on cost to provide the borrower with the service less the cost of the product as in other purchases.

In the case of a loan the qualifications and history of the borrower, the amount of investment by the borrower and even property type and occupancy status of the property being collateralized are weighed to determine a unique risk profile for each loan. Every aspect of the transaction is carefully considered before a bank makes any solid offer for interest rate or closing fees.

Here are the factors considered by the lender in pricing your loan:

Transaction type-What are the customer’s needs?

Tags: mortgage qualifying loans banks underwriting income credit equity

Avoid PMI - Private Mortgage Insurance

By Matthew Killikelly

Home ownership is synonymous with the American Dream. Yet, the road to home ownership has become harder to travel in recent years as home prices increase faster than the average buyer can accumulate their required down payment and closing fees. Thus, many consumers find it increasingly difficult to accumulate enough money for the traditional 20% down payment and 3-5% closing costs required to purchase a home. Hence a $200,000 purchase would require as much as $50,000 for down payment and closing fees with the buyer required to retain a reserve of several thousand dollars after the transaction as a safety net. With the increased cost of living it's harder than ever to hit such numbers.

Tags: mortgage pmi insurance