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| Ban Upfront Fees On Mortgage Modifications |
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| FTC proposes ban on upfront fees The Federal Trade Commission proposed a new rule that would protect distressed homeowners from scam artists who are promising to "prevent foreclosure", and "rescue homes by modifying the mortgages". These companies usually collect a fee upfront for their services. Under this new proposal companies can not collect any monies until after they have provided service. This service could include a documented loan offer from a lender. The housing crisis and the subprime meltdown have spawned a new species of financial experts. The FTC has already brought cases against 28 companies that charge upfront fees and then do not deliver what they promised. State and local law enforcement agencies have brought hundreds more. The concerns of the FTC and other government agencies go beyond the loss of the fees. Companies are clouding that facts about who they really are. Many homeowners are led to believe that the company negotiating on their behalf is affiliated with public entities, and that it is working alongside various community and housing agencies. In addition to not charging upfront fees, the proposed rule would demand that loan modification service companies do the following.
In October 2009, Governor Schwarzenegger of California signed Senate Bill 94, which barred companies from charging upfront fees. There are several states that have similar laws. In California the ban is temporary and expires on January 1, 2013. California has taken the fight against mortgage abuse very seriously and has gone a step further with Assembly Bill 260. This bill prevents mortgage brokers from making excessive, and lucrative fees on second mortgages. In addition, Bill 260 will limit the prepayment penalty for borrowers when they pay off their mortgage early. One other feature of Bill 260 that is sure to benefit homeowners, is the ban on negative amortization loans. With such loans the borrower pays a small monthly payment. In many cases, it hardly covers the interest portion. The shortfall is added on to the principal. In a short period of time, the mortgage balance is greater than the original loan balance. The rule proposed by the FTC has a 45 day public comment period and ends on March 29, 2010. Maybe the FTC will follow the lead of California and put a stop to these predatory companies. prev: next: Home: |
Why Refinancing With Your Current Lender Is Not Always Good. The lender has you as a customer and knows that people in general hate to change. They hate to shop around. It means work. It means going from one lender to another and answering the same questions over and over again. If you are like me, you prefer to have everything neatly wrapped with a bow on top and handed to me. First, if your are paying 8% and the market is now at 5%, the lender will offer 7% and think he's doing you a favor. Next, he will keep putting you off, telling you that he's working on your file. This tactic is supposed to stop you from shopping, and also to frustrate you. If you bluff and say that you were offered 6% he might match the rate. Or he might call your bluff and counter with 6.5%. He would reason with you that it's not worth the time, effort, and fees to move the account over such a small difference in percentage. The best strategy is to get two solid offers in writing and show your lender. This proves to him how serious you are and that it's all business. Next get an offer from your current lender in writing, and tell the other two lenders what you were offered. Now sit back and see who gives you the best deal. prev: next: Home: |
| FTC Protects At-Risk Homeowners: An End To Foreclosure Relief Scams The Federal Trade Commission has passed a new law that will protect homeowners from foreclosure relief scams. The housing crisis brought many criminal individuals to the market. Overnight, there were thousands of individuals and companies offering mortgage relief to at-risk homeowners. Homeowners were promised a mortgage modification or other means of avoiding foreclosure. These companies often charge high fees but deliver nothing. Most of the fees are required to be paid upfront before any work is done. The new law says that these companies cannot collect any fees until the homeowners is satisfied with the service provided. That service is a loan modification that is acceptable to the customer. Attorneys are the only exception to the new rule. Attorneys generally ask for a retainer. This is an acceptable practice. Any money taken from the customer will be placed in a trust account. Non-profit organizations that offer counseling services and charge a fee are waiting to see if they can get an exception, similar to the lawyers. There are many lawyers that work with the non-profits The advance fee or retainer provision becomes law on January 31, 2011. prev: next: Home: |
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| Mortgage Junk Fees There are thousands of dollars in junk fees that you can ask your lender to waive or reduce. Some fees you don't mind paying, for example, appraisals, home inspections and flood certification fees. Application fees and commitment fees are a joke. You are seeking a loan. There is no logic for paying an application fee. Same with a commitment fee. The lender checked your application and is happy to get you as a client. Why do you have to pay for him to express his joy via a written commitment? Challenge your fees and ask for a reduction whenever possible. Watch the slideshow. |
| MARS: No Enforcement? MARS was created in 2009 to protect consumers from shady loan modification and foreclosure rescue scams. There were two specific areas of concern. One was the upfront fees. The scam artists collected the money and ran. The other concern was disclosure. The crooks never disclosed anything. They just promised everything under the sun. MARS corrected these two glowing mistakes. A real estate agent who tried to help a homeowner negotiate with the bank, and in return he gets to sell the house, found himself walking a tightrope. He could be sued by the homeowner or by the bank. He could even be found in violation of MARS. So this is where the National Association of Realtors stepped in. Watch the slideshow. |
