Well folks here we are, three years into a recession and we are now over-regulated to the point I can honestly say we can't get anything done! On April 1, 2011 the implementation of the Financial Reform Act written by the genius's Senators Dodd and Frank went into effect and guess what? Home loans are frozen again!!!
As I spend most of my days researching comparable sales and fighting low-ball appraisers who have labeled the appraisal process as "low and go", that's right. We are now in a situation where banks or consumers pay for an appraisal that isn't worth the paper its written on.
Since we have been forced to pick an appraiser out of a hat, the quality and integrity of the appraisal process is finally at an all time low. Literally every appraisal I see from a bank ordered AMC is such a waste of time, they should be ashamed to sign their names to these reports. It isn't even a value issue anymore, its quality!
Dear appraisers,
I know you have taken a pay cut but honestly, you are still putting your name on these things. Have some integrity in your work! I spoke with an appraiser today that told me flat out, he doesn't get paid to do a good job anymore so essentially the good appraisers took a pay cut and the incompetent ones got a raise. I have seen appraisals from appraisers that shouldn't have a license yet they continue to have control over your refinance or purchase transaction. Thank you Cuomo, Dodd and Frank. In your efforts to help the consumer, you have created grid-lock, higher prices, lack of quality and incompetent appraisals on the collateral in which banks lend. Bravo! Thank you so much for looking out for us!
What's next? Should we have cancer patients pick a doctor out of a hat or a corporation being audited pick a CPA out of a hat? That's essentially what's happened.
To my loyal customers, I will continue to fight and work hard for you to get your loans through. Times will change and history will repeat itself, we need to have patience and tenacity because in the end we are still "American" and we are strong and we need to resume to the Freedom we have fought for. Free enterprise has been compromised and its costing you money and home ownership. It is also eroding your wealth and the ability to live a prosperous life.
We are seeing a tilt with some of our portfolio lenders who are opting to have approved appraisal panels so we can again have the property valued before we submit the loan, the value of this process is that appraisers are held accountable for the work he or she is performing. At CFAM we strive to protect our consumers as well as our lenders from this bad behavior. These practices and procedures conjured up politico simply do not work. We are here to help you protect your investment and build wealth. We will say no to these bad, inefficient practices and procedures and when one of these bad appraisals cross our desks, we will fight for what's right! Your family is just as important as my family and your homes are as important as our.
Is Our Government Forcing our Banks to Fail? I Say Yes!
Now that most of the bombs have been detonated and there is loan and bank shrapnel scattered everywhere those of us still standing are wondering where the dust will finally settle. As in most cases where too little has been done too late you are likely to see history repeat itself, like "LOCK THE BARN AFTER THE HORSE IS GONE"! So what to do next? "OVER COMPENSATE" and that is what we have now is "over-regulation", to the point nothing can be done. Yes, that's where we are stopped, halted, frozen, gridlocked, caught in bureaucratic red tape!
Is is possible the Government is causing bank failure at this point? Interesting question one might ask. If you talk to anyone in the banking industry you are likely to hear a "yes" on many different levels. I know this theory is "so outrageous" but if you thought five years ago the economy would be where it is today, that would have been considered outrageous as well.
What I see is the White House administration and our president flapping their pearly whites to the people "we need to get the banks lending again", the absolute reverse is happening. Bottom line? With tightened regulation, most consumers no longer qualify for loans. Small businesses all over the country are suffering because the existing lines of credit they once had have now been suspended, frozen or called due (yes, I said called due). I have yet to see "any" bank offering new lines of credit to small businesses and in the home loan sector, lines of credit or seconds are simply a dirty word.
In layman's terms, government regulators with all their little sharpened pencils have created "so many" unrealistic rules and regulations that it is nearly impossible for the Banks to lend and for consumers to get loans. If you add the "pick an appraiser out of a hat policy or HVCC" to the equation, its no different than playing at the craps table. HVCC is directly out of a horror novel. Let me lay it out simply. Do you want the government to tell you that you have to pick your lawyer or accountant or doctors name out of a hat, not even a hat you can see? There is a mystery person whose job is to pick the name out of a hat that is directed by the bank you are using. Further, you're not allowed to ask questions, talk to the appraiser or even contact him or her but oh I forgot, you have to pay for it. That about sums up the appraisal process.
Unfortunately its not very politically correct to be speaking of our fine policy makers, leaders and lending institutions this way but this is where we are folks and this is another reason our economy continues to falter. Money simply cannot move, it is stuck and your government has frozen it! Banks are hoarding money for fear of the regulators and this fear stifles innovative lending to our small businesses and entrepreneurs. Capitalism is completely gone in the lending industry and we must change this. Banks must take risk to lend and for that risk banks deserve to make a profit, it's just that simple!
Every lender I deal with is telling me regulators come in and ask how the lending business works (o.k. that's horrifying in itself) then they sit there and think of new forms and new guidelines for the lenders to adhere to. I hear from every lender I have ever done business with that the bank regulators that come in to make the rules, in most cases have "no idea" what we do or what they are talking about and begin the conversations with "so tell us what you do and how you do it". So these are the people sent from the government to protect the consumers? GOD HELP US ALL!!!!!!!!!
Now lets talk about the new RESPA and the new closing statement or disclosures. There isn't one person in this industry including banks underwriters, loan officers, funders, title companies, escrow officers or bank officers who share a common understanding of this form. If we can't read it and commonly understand it, how can we explain it to our customers? It also has funds incorrectly reporting for tax purposes so I can't wait until the IRS gets their hands on it. So I say why aren't the people who are knowledgeable in this industry, those of us who are in it day to day consulted on what should be done?
We have an over eager administration wanting to change the banking industry in a day and things just don't work that way. If a house needs a new roof you don't tear down the whole house, you simply replace the roof.
COME ON AMERICANS, LETS "BE AMERICAN" AGAIN!!!!!!
Is is possible the Government is causing bank failure at this point? Interesting question one might ask. If you talk to anyone in the banking industry you are likely to hear a "yes" on many different levels. I know this theory is "so outrageous" but if you thought five years ago the economy would be where it is today, that would have been considered outrageous as well.
What I see is the White House administration and our president flapping their pearly whites to the people "we need to get the banks lending again", the absolute reverse is happening. Bottom line? With tightened regulation, most consumers no longer qualify for loans. Small businesses all over the country are suffering because the existing lines of credit they once had have now been suspended, frozen or called due (yes, I said called due). I have yet to see "any" bank offering new lines of credit to small businesses and in the home loan sector, lines of credit or seconds are simply a dirty word.
In layman's terms, government regulators with all their little sharpened pencils have created "so many" unrealistic rules and regulations that it is nearly impossible for the Banks to lend and for consumers to get loans. If you add the "pick an appraiser out of a hat policy or HVCC" to the equation, its no different than playing at the craps table. HVCC is directly out of a horror novel. Let me lay it out simply. Do you want the government to tell you that you have to pick your lawyer or accountant or doctors name out of a hat, not even a hat you can see? There is a mystery person whose job is to pick the name out of a hat that is directed by the bank you are using. Further, you're not allowed to ask questions, talk to the appraiser or even contact him or her but oh I forgot, you have to pay for it. That about sums up the appraisal process.
Unfortunately its not very politically correct to be speaking of our fine policy makers, leaders and lending institutions this way but this is where we are folks and this is another reason our economy continues to falter. Money simply cannot move, it is stuck and your government has frozen it! Banks are hoarding money for fear of the regulators and this fear stifles innovative lending to our small businesses and entrepreneurs. Capitalism is completely gone in the lending industry and we must change this. Banks must take risk to lend and for that risk banks deserve to make a profit, it's just that simple!
Every lender I deal with is telling me regulators come in and ask how the lending business works (o.k. that's horrifying in itself) then they sit there and think of new forms and new guidelines for the lenders to adhere to. I hear from every lender I have ever done business with that the bank regulators that come in to make the rules, in most cases have "no idea" what we do or what they are talking about and begin the conversations with "so tell us what you do and how you do it". So these are the people sent from the government to protect the consumers? GOD HELP US ALL!!!!!!!!!
Now lets talk about the new RESPA and the new closing statement or disclosures. There isn't one person in this industry including banks underwriters, loan officers, funders, title companies, escrow officers or bank officers who share a common understanding of this form. If we can't read it and commonly understand it, how can we explain it to our customers? It also has funds incorrectly reporting for tax purposes so I can't wait until the IRS gets their hands on it. So I say why aren't the people who are knowledgeable in this industry, those of us who are in it day to day consulted on what should be done?
We have an over eager administration wanting to change the banking industry in a day and things just don't work that way. If a house needs a new roof you don't tear down the whole house, you simply replace the roof.
COME ON AMERICANS, LETS "BE AMERICAN" AGAIN!!!!!!
Having trouble getting a loan? Follow God!
If you’re lucky to get one approved, here is the process. You see the loan comes out of the loan processing center in hell and moves to the minister for approval (who is on earth) then passes the Angels who bless it. It then moves to the the God level, if you’re lucky God will bless it. Then is has to fall though heaven back to earth for docs and if the condition angel is asleep and misses you will have to wait until the next day for the condition Angel to give you conditions, the loan will move to the the doc Angel, if the doc Angel is asleep you may have to wait 5 business days because God and the Angels don’t work overtime or weekends (for loans) and are very busy and must audit the file for bad deeds. If all is good the loan then falls back to earth.
The next phase is the government regulators who regulate what God does, this will take 7 business days. Then another 5 days for re-disclosure of Gods counter offer on the loan, because the government wants to make sure you agree with God. By this time you may have died and gone past the Angels right to heaven and the loan is no longer needed.
By Rosie Rains
The next phase is the government regulators who regulate what God does, this will take 7 business days. Then another 5 days for re-disclosure of Gods counter offer on the loan, because the government wants to make sure you agree with God. By this time you may have died and gone past the Angels right to heaven and the loan is no longer needed.
By Rosie Rains
WHAT DO FED RATE CUTS MEAN TO YOU?
Consumers are eager to think that when the Federal Reserve cuts interest rates, it means that they should call their friendly neighborhood mortgage broker and inquire about refinancing their home loans. It doesn't always work out that way.
Re-financing remains a great way to build wealth and get the maximum benefit out of home ownership. But consumers should not expect that a Fed Rate cut will be immediately reflected in the kind of interest rate they are offered.
Over the past two months, the Fed has cut the federal funds rate by 2.25 points, to 3 percent. This is the rate banks charge each other for overnight loans. The Fed also cut the discount rate, what it charges banks for funds, by 1.75 points, down to 3.5 percent.
So what has been the result? Well, the mortgage rate for A-list borrowers has come down a bit. But risk is still the boogey-man that is scaring off lenders. Any factor which lenders perceive as increasing the risk of default will bump a borrower's rates up beyond what they were when the Fed began the latest round of rate cuts.
We are still in an unsettled loan market, and everything the Fed has done lately hasn't been able to change that.
Re-financing remains a great way to build wealth and get the maximum benefit out of home ownership. But consumers should not expect that a Fed Rate cut will be immediately reflected in the kind of interest rate they are offered.
Over the past two months, the Fed has cut the federal funds rate by 2.25 points, to 3 percent. This is the rate banks charge each other for overnight loans. The Fed also cut the discount rate, what it charges banks for funds, by 1.75 points, down to 3.5 percent.
So what has been the result? Well, the mortgage rate for A-list borrowers has come down a bit. But risk is still the boogey-man that is scaring off lenders. Any factor which lenders perceive as increasing the risk of default will bump a borrower's rates up beyond what they were when the Fed began the latest round of rate cuts.
We are still in an unsettled loan market, and everything the Fed has done lately hasn't been able to change that.
The Little Black Book of Wealth Building Mortgage Secrets
My book is now available for pre-order on Amazon and other websites. June 29 is the official publishing date for McGraw Hill to hit the bricks with THE LITTLE BLACK BOOK OF WEALTH BUILDING MORTGAGE SECRETS: Insider Strategies for Securing a Stable Mortgage and Avoiding Common Pitfalls in Any Market. Be the first on your block to order one and you'll not only get an invaluable guide to the in's and out's of the mortgage market, you could be making an investment that pays off in more ways than one. You know what the market for first editions is these days! I hope WEALTH BUILDING MORTGAGE SECRETS sees many more editions and leads to a whole series of sibling books.
STOP THE PRIME-RATE FREAK-OUT
Let's all stop riding the roller coaster freak-out. As consumers and as a country, we all seem to be locked into a periodical cycle of anxiety over interest rates. Every quarter, we rush around like a flock of hens spooked by the shadow of a falcon. Will the prime rate go up? Will the prime rate go down? Inflamed by the commentary of financial prognosticators, the great prime-rate freak-out hits us every three months. You can set your calendar by it.
I say, relax. Check out the history of the prime rate for today’s lesson on why you shouldn’t believe the hype about the high cost of money. My advice is to get a grip and realize that we are all in a very good place right now if you want to get a mortgage or sell a home.
Let’s look at the how the prime rate affects the mortgage rate. Fluctuations in mortgage rates are directly tied with the fluctuations of other interest rates: The Prime Rate, Treasury Bill Rate, Treasury Notes, Treasury Bonds, Federal Funds Rate, Federal Discount Rate, Libor 6-month CD Rate, 11th District Cost of Funds, Fannie Mae-Backed Security Rates, Ginnie Mae-Backed Security Rates.
When Fed chairman Bernanke isn’t being undermined by the loose-cannon comments of former chairman Greenspan, he has been cautiously raising rates to deal with mild economic growth and mild inflation. “Mild” is the operative word here. It has all been mild, mellow, and moderate behavior since Bernanke took the chair in summer 2006.
The Federal Reserve is simply changing the discount rate (yesterday left unchanged at 5.25), which is the rate paid by a bank to borrow short-term funds from the Federal Reserve. The discount rate and the federal funds rate are the interest rates that mortgage rates are based on; the modulating economic cycles therefore influence financing a purchasing a home.
There is a glut of homes for sale out there, but that is mainly because owners have overpriced them, not because of foreclosure or high interest rates. History can hold our hand and calm our worry. The fact is, if we track the cost of money over the last six decades, the prime rate remains under the median.
As of June 29, 2007 the prime rate is 8.25, which is what it was exactly one year ago in 2006.
Pop open this window link below to see the history of the prime since 1947.
PRIME RATE HISTORY - 1947-PRESENT
The evidence shows our prime rate is still under the most frequent prime rate throughout history – 8.5. The median rate for the last 60 years has been 9.0--that’s our benchmark, that’s how we should measure ourselves. Don’t listen to the pundits, don’t listen to the clucking hens, don’t freak out every three months over whether the rate is going up or down.
Relax. And if you are waiting for rates to go down before you buy or sell property, don't. According to current pricing on futures contracts, heavy-hitter investors who trade in Fed Funds Futures proffer odds of just fifteen percent that the prime rate will be lower by the end of the year -- characterized as "very unlikely."
Bottom line: rates are historically low right now, and they are unlikely to go lower in the near future. The prime-rate freak-out hurts consumers, hurts the economy and hurts anyone who is looking to buy or sell a home. Avoiding it represents an opportunity for clear thought and wealth-building.
I say, relax. Check out the history of the prime rate for today’s lesson on why you shouldn’t believe the hype about the high cost of money. My advice is to get a grip and realize that we are all in a very good place right now if you want to get a mortgage or sell a home.
Let’s look at the how the prime rate affects the mortgage rate. Fluctuations in mortgage rates are directly tied with the fluctuations of other interest rates: The Prime Rate, Treasury Bill Rate, Treasury Notes, Treasury Bonds, Federal Funds Rate, Federal Discount Rate, Libor 6-month CD Rate, 11th District Cost of Funds, Fannie Mae-Backed Security Rates, Ginnie Mae-Backed Security Rates.
When Fed chairman Bernanke isn’t being undermined by the loose-cannon comments of former chairman Greenspan, he has been cautiously raising rates to deal with mild economic growth and mild inflation. “Mild” is the operative word here. It has all been mild, mellow, and moderate behavior since Bernanke took the chair in summer 2006.
The Federal Reserve is simply changing the discount rate (yesterday left unchanged at 5.25), which is the rate paid by a bank to borrow short-term funds from the Federal Reserve. The discount rate and the federal funds rate are the interest rates that mortgage rates are based on; the modulating economic cycles therefore influence financing a purchasing a home.
There is a glut of homes for sale out there, but that is mainly because owners have overpriced them, not because of foreclosure or high interest rates. History can hold our hand and calm our worry. The fact is, if we track the cost of money over the last six decades, the prime rate remains under the median.
As of June 29, 2007 the prime rate is 8.25, which is what it was exactly one year ago in 2006.
Pop open this window link below to see the history of the prime since 1947.
PRIME RATE HISTORY - 1947-PRESENT
The evidence shows our prime rate is still under the most frequent prime rate throughout history – 8.5. The median rate for the last 60 years has been 9.0--that’s our benchmark, that’s how we should measure ourselves. Don’t listen to the pundits, don’t listen to the clucking hens, don’t freak out every three months over whether the rate is going up or down.
Relax. And if you are waiting for rates to go down before you buy or sell property, don't. According to current pricing on futures contracts, heavy-hitter investors who trade in Fed Funds Futures proffer odds of just fifteen percent that the prime rate will be lower by the end of the year -- characterized as "very unlikely."
Bottom line: rates are historically low right now, and they are unlikely to go lower in the near future. The prime-rate freak-out hurts consumers, hurts the economy and hurts anyone who is looking to buy or sell a home. Avoiding it represents an opportunity for clear thought and wealth-building.
LENDING COME-ONS THAT ARE TOO GOOD TO BE TRUE
Predatory lending is back (did it ever go away?)
Recently, a client I’ve been working with on refinancing walked into my office with a mailer from a mortgage company. My client wanted me to beat the rate that the company was offering:
“Dear Borrower”
Regarding your existing home loan with us, we are currently offering an exclusive program to refinance your existing loan. Features of this program offer significant savings and can assist you in the changing mortgage market.
•NO Costs
•NO Points
•NO asset verification
•NO Application fee
•NO Credit repots
•NO No third party fees
•NO title, no escrow, or reporting fees
•ABSOLUTELY NO CLOSING COSTS.
“Smells as fishy as twelfth-century Denmark in August,” I said to my I-want-to-believe-in-a-free-lunch client.
“Well, this is from a good bank,” he said.
“Stay right there,” I said.
With my client still sitting in my office, I dialed and got an agent on speakerphone. I pretended I was the wife of my client and asked about the mailer rate. When I started asking what the bank’s YSP (Yield Spread Premium) was, and what his bank margin rate is, the agent started to back-peddle. He got awful mealy-mouthed awful quick.
The actual loan being offered to back up the mailer certainly was NOT a thirty year or even a fifteen-year mortgage. It was an ARM (Adjustable Rate Mortgage). Essentially, what the mailer offered was a disguised piece of lending, a wolf in sheep’s clothing.
It is now June 2007. The sub-prime crisis is supposed to be over, but still consumers receive these come-ons. People wind up in ridiculous loans for which they are overpaying on the back end. Lenders are supposed to be tightening up their practices. Ha!
Our federal and state agencies promote consumer education as the key to obtaining best rates on a home loan. That mailer should come with a consumer warning, but it doesn't. Here's one that I would append: "There's no such thing as a free lunch! No fees? No costs? Every single penny of those fees and those costs will be rolled up into your loan, so you'll be paying a high rate to finance them!"
Regrettably, the public – my client, for example – still wants to believe such too-good-to-be-true offers are the answer to refinancing.
ALSO: the buzz is out that fly-by-night mortgage companies continue to outsource their administrative jobs to India. Staffers say that If you call the internal help line for Human Resources, you’ll be talking (more like translating) with someone in India. And how would you feel if you did a refi and all your confidential customer information is on-line over there in Mumbai?
You will find that shady mortgage companies are constantly looking for new underwriters. Whenever you go to any job-searching engine, see their pleas for folks who will write bad paper. The sheep disguise can’t hide the big bad wolf’s fangs.
Recently, a client I’ve been working with on refinancing walked into my office with a mailer from a mortgage company. My client wanted me to beat the rate that the company was offering:
“Dear Borrower”
Regarding your existing home loan with us, we are currently offering an exclusive program to refinance your existing loan. Features of this program offer significant savings and can assist you in the changing mortgage market.
•NO Costs
•NO Points
•NO asset verification
•NO Application fee
•NO Credit repots
•NO No third party fees
•NO title, no escrow, or reporting fees
•ABSOLUTELY NO CLOSING COSTS.
“Smells as fishy as twelfth-century Denmark in August,” I said to my I-want-to-believe-in-a-free-lunch client.
“Well, this is from a good bank,” he said.
“Stay right there,” I said.
With my client still sitting in my office, I dialed and got an agent on speakerphone. I pretended I was the wife of my client and asked about the mailer rate. When I started asking what the bank’s YSP (Yield Spread Premium) was, and what his bank margin rate is, the agent started to back-peddle. He got awful mealy-mouthed awful quick.
The actual loan being offered to back up the mailer certainly was NOT a thirty year or even a fifteen-year mortgage. It was an ARM (Adjustable Rate Mortgage). Essentially, what the mailer offered was a disguised piece of lending, a wolf in sheep’s clothing.
It is now June 2007. The sub-prime crisis is supposed to be over, but still consumers receive these come-ons. People wind up in ridiculous loans for which they are overpaying on the back end. Lenders are supposed to be tightening up their practices. Ha!
Our federal and state agencies promote consumer education as the key to obtaining best rates on a home loan. That mailer should come with a consumer warning, but it doesn't. Here's one that I would append: "There's no such thing as a free lunch! No fees? No costs? Every single penny of those fees and those costs will be rolled up into your loan, so you'll be paying a high rate to finance them!"
Regrettably, the public – my client, for example – still wants to believe such too-good-to-be-true offers are the answer to refinancing.
ALSO: the buzz is out that fly-by-night mortgage companies continue to outsource their administrative jobs to India. Staffers say that If you call the internal help line for Human Resources, you’ll be talking (more like translating) with someone in India. And how would you feel if you did a refi and all your confidential customer information is on-line over there in Mumbai?
You will find that shady mortgage companies are constantly looking for new underwriters. Whenever you go to any job-searching engine, see their pleas for folks who will write bad paper. The sheep disguise can’t hide the big bad wolf’s fangs.
STICKING IT TO WOMEN
Hey, ladies! What’s up with women as mortgage borrowers?
There’s a new study by the Consumer Federation of America CFA (a nonprofit advocacy org.) that found a third of women in the boom year of 2005 got mortgages with interest rates over 7.66 percent (well above the average prime mortgage rate of 5.87 percent). Whoa! How is it that women typically have better credit scores than men and yet still pay a whole heck of a lot more for mortgages than their y-chromosome brethren? Thousands upon thousands of dollars more, over the course of a loan – that’s the penalty for womanhood.
And a real Prada-boot-kick to this not-too-surprising revelation about women is that wealthier women are victimized the most: fifty percent more likely to be saddled with more expensive loans than their male equivalents. Women wound up paying as much as between 7.5 percent to 9.5 percent interest rates on home loans. You can’t build wealth from home ownership with those kinds of numbers.
Women get stuck into sub-prime and high-cost loan ghettos while at the same time the guys, some with lower credit scores, get good rates and aren’t jammed with the junk.
Allen Fishbein of CFA noted in his “Women Prime Targets” study: “Women are significantly over-represented in the pool of subprime mortgages. Although women make up 30.0 percent of borrowers for mortgages of all types, they make up 38.8 percent of subprime borrowers – a 29.1 percent over-representation. This over-representation of women in the subprime mortgage pool exists for all types of mortgages but is especially true of refinance and home improvement loans which are more likely to be sub-prime and predatory mortgages.”
And Allen’s colleague, Nancy Register, Associate Director of Consumer Federation of America says: “The high levels of sub-prime lending among women compromise their ability to steadily accrue equity by paying off their mortgage – one of the easiest and most effective pathways to building wealth in America.”
As you know, creating wealth from your mortgage is what I am all about. These kind of statistics really put a frown on me.
But, it gets worse: The study shows that women of color, women who are African-American and Latino, have the highest incidence of sub-prime jamming.
Allen Fishbein of CFA noted in the study, “African American women earning double the area median income were nearly five times more likely to receive sub-prime home purchase mortgages than white men with similar incomes and Latino women earning twice the area median income were about four times more likely to receive sub-prime purchase mortgages than white men with similar earnings. African American women make up half the African American purchase mortgage borrowers and Latino women make up nearly a third of Latino home purchase mortgage borrowers.”
And this sucks because women are in the driver’s seat in the Latino and African-American surge in home ownership.
Girls, this really gets me mad. This sexist and racist home lending practice doesn’t have to be. Hey, I certainly don’t do it at my desk. And you don’t have to take it when you are sitting at any lender’s desk. So, you ladies need to be informed and stop taking the crap. You don’t need to be hooked up with a guy to get a good mortgage. Forget the ball and chain. You just need to get smart and get tough on this. If the home-finance world sucks then it’s the borrower’s job, that means you, to make sure it doesn’t suck. I sincerely believe that. The borrower has to do some hard work too to get out of this sexist bind. She has to familiarize herself with what exactly they are doing at the underwriter’s desk. We all have to get the best intel on lending practices and procedures and act as our own best advocate. The borrower needs to shop around and get tough with the lender to get the best rate.
Right now, the real news is that CFA’s findings raise important public-policy concerns, since adjustable rate mortgage rates are on the rise and monthly payments reset upward this year and next. And adjustable rate mortgages were the predominant product in the sub-prime market. With all the panic as borrowers foreclose, and as bankrupt lenders close up shop, it will be ever more difficult for the ladies to get themselves out of the sub-prime market. Sustainable terms of a prime loan will be more rare than ever. With the new lending guidelines now being implemented, and the new scrutiny by brokers, there’s a lender backlash that is going to make underwriters like me have to do some fancy foot work in the days ahead to get women and even men out of the sub-primes so that they can hold on to their homes.
There’s a new study by the Consumer Federation of America CFA (a nonprofit advocacy org.) that found a third of women in the boom year of 2005 got mortgages with interest rates over 7.66 percent (well above the average prime mortgage rate of 5.87 percent). Whoa! How is it that women typically have better credit scores than men and yet still pay a whole heck of a lot more for mortgages than their y-chromosome brethren? Thousands upon thousands of dollars more, over the course of a loan – that’s the penalty for womanhood.
And a real Prada-boot-kick to this not-too-surprising revelation about women is that wealthier women are victimized the most: fifty percent more likely to be saddled with more expensive loans than their male equivalents. Women wound up paying as much as between 7.5 percent to 9.5 percent interest rates on home loans. You can’t build wealth from home ownership with those kinds of numbers.
Women get stuck into sub-prime and high-cost loan ghettos while at the same time the guys, some with lower credit scores, get good rates and aren’t jammed with the junk.
Allen Fishbein of CFA noted in his “Women Prime Targets” study: “Women are significantly over-represented in the pool of subprime mortgages. Although women make up 30.0 percent of borrowers for mortgages of all types, they make up 38.8 percent of subprime borrowers – a 29.1 percent over-representation. This over-representation of women in the subprime mortgage pool exists for all types of mortgages but is especially true of refinance and home improvement loans which are more likely to be sub-prime and predatory mortgages.”
And Allen’s colleague, Nancy Register, Associate Director of Consumer Federation of America says: “The high levels of sub-prime lending among women compromise their ability to steadily accrue equity by paying off their mortgage – one of the easiest and most effective pathways to building wealth in America.”
As you know, creating wealth from your mortgage is what I am all about. These kind of statistics really put a frown on me.
But, it gets worse: The study shows that women of color, women who are African-American and Latino, have the highest incidence of sub-prime jamming.
Allen Fishbein of CFA noted in the study, “African American women earning double the area median income were nearly five times more likely to receive sub-prime home purchase mortgages than white men with similar incomes and Latino women earning twice the area median income were about four times more likely to receive sub-prime purchase mortgages than white men with similar earnings. African American women make up half the African American purchase mortgage borrowers and Latino women make up nearly a third of Latino home purchase mortgage borrowers.”
And this sucks because women are in the driver’s seat in the Latino and African-American surge in home ownership.
Girls, this really gets me mad. This sexist and racist home lending practice doesn’t have to be. Hey, I certainly don’t do it at my desk. And you don’t have to take it when you are sitting at any lender’s desk. So, you ladies need to be informed and stop taking the crap. You don’t need to be hooked up with a guy to get a good mortgage. Forget the ball and chain. You just need to get smart and get tough on this. If the home-finance world sucks then it’s the borrower’s job, that means you, to make sure it doesn’t suck. I sincerely believe that. The borrower has to do some hard work too to get out of this sexist bind. She has to familiarize herself with what exactly they are doing at the underwriter’s desk. We all have to get the best intel on lending practices and procedures and act as our own best advocate. The borrower needs to shop around and get tough with the lender to get the best rate.
Right now, the real news is that CFA’s findings raise important public-policy concerns, since adjustable rate mortgage rates are on the rise and monthly payments reset upward this year and next. And adjustable rate mortgages were the predominant product in the sub-prime market. With all the panic as borrowers foreclose, and as bankrupt lenders close up shop, it will be ever more difficult for the ladies to get themselves out of the sub-prime market. Sustainable terms of a prime loan will be more rare than ever. With the new lending guidelines now being implemented, and the new scrutiny by brokers, there’s a lender backlash that is going to make underwriters like me have to do some fancy foot work in the days ahead to get women and even men out of the sub-primes so that they can hold on to their homes.
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