This is good information blogged by Sheldon Neal, but originally shared by an LO in New Jersey. Good tips for consumers to be aware of.
Let me start by saying that this information was actually sent to me by one of the reputable Loan Officers out there - but his reason for sending was to alert consumers as to some of the main violations that the less-scrupulous mortgage representatives are commiting.
This is just one more example underlining the critical importance of choosing a Mortgage Consultant that you know and trust, or is a referral from a trusted family member or a close friend who HAS EXPERIENCE or knows someone who has USED, and had a good experience with that Loan Officer. You can find many of those reputable mortgage representatives on ActiveRain.com.
According to the people at Rismedia.com, the Consumer Mortgage Audit Center recently released a report stating that "Ninety-eight percent of all mortgages are potentially eligible to be renegotiated due to Truth in Lending Act violations according to a review of thousands of mortgage documents undertaken by the Consumer Mortgage Audit Center (CMAC). The vast majority of the violations tend to take the form of missing paperwork, bad "good-faith" estimates, hidden and misrepresented payments, double-dipping brokers, and the lack of documentation of income."
CMAC conducts daily comprehensive audits of mortgage documentation, and every day they find errors - including occasionally finding intentional mortgage violations.
According to CMAC's findings, here are the five most common mortgage violations that break laws within the Truth in Lending Act and Real Estate Settlement Procedure Act:
-Missing paperwork. The federal Truth in Lending Act states that lenders must clearly disclose key loan terms and costs at time of mortgage application and home closing; however, if paperwork is missing, buyers may never see the final mortgage terms and costs. About (98 percent) of mortgages CMAC reviews include this violation.
-Bad "good-faith" estimates. Good faith estimates are supposed to be documentation of mortgages and costs for buyers to compare and contrast one mortgage offer to another. However, some brokers write low-ball good faith estimates as a "bait and switch" by showing homeowners they'll offer lower costs and mortgage terms, then later inserting higher interest rates, higher closing costs or mortgages that some homeowners can't afford. CMAC sees (21 percent) of this violation in its mortgage reviews.
-Incorrect payment representations that drive up APRs. Unscrupulous lenders play a bit of a shell game with Truth In Lending Disclosure Statements, which are estimations of the cost of borrowing money to buy a home, the expected payments for a mortgage and other related details. When lenders fill out these documents with incorrect information-particularly in the payment section-the Annual Percentage Rate for the loan changes with each error, leaving homeowners with unexpected payment increases that can lead to foreclosures, if not paid. One-quarter (26 percent) of mortgages CMAC reviews include this violation.
-Double-dipping brokers. Within three days of offering a good faith mortgage estimate, brokers are supposed to reveal income to be paid outside closing, often referred to as the yield-spread premium. Unsavory brokers do not disclose the income to the borrower on the GFE. The borrower finds out about the YSP at closing on the HUD-1.
-No documentation of income. Initially designed to help the self-employed who don't often have a paper trail to show income history, mortgages written with little-if any- documentation of the buyer's income enable deceitful brokers to fill in false income data that allows borrowers to qualify for larger loans and brokers to make higher commissions. One third (33 percent) of mortgages reviewed by CMAC include this violation.
"Paperwork is never fun to deal with, but there are ways homeowners can tell if they've been victim to a mortgage violation," said Sylvia Alayon, vice president of operations for CMAC. Comparing the HUD-1 document, which buyers get at settlement to outline most costs, with the same lender's good faith estimate is a great first step. If the figures on your HUD-1 and your good faith estimate look different, it may be time to investigate this.
The Consumer Mortgage Audit Center is a due diligence and consulting company specializing in the field of mortgage forensic research and analysis. CMAC boasts a highly specialized team of mortgage experts who are also members of the American College of Forensic Examiners Institute and represent a combined experience of over 80 years in mortgage finance and law.
The reputable Loan Officers out there will be happy to discuss these items, and explain clearly the RIGHT way to the Mortgage Loan Process.
Again, now more than ever it is essential to choose a reliable Loan Officer who can get your loan APPROVED and get you to the closing table.
I'll help you get pre-approved for your Texas home loan and even suggest some very knowledgeable and professional Real Estate Agents in your area of choice. If you are available to talk, I am available to listen. Give me a call or visit my website for more details.
Do you want to know all of your mortgage options? Call me today and let's discuss them further.
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John R Cannata P#214.728.0449
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The views expressed on this site are mine alone and do not reflect the views of my employer.