Welcome to Home Mortgages
Mortgage Loan Article
This is a selection made from among articles on Mortgage Loan. For a permanent link to this article, or to bookmark it for future reading, click here.
from:
Making Subprime Mortgages Illegal?
By Nick Adama
With all of the furor over the subprime mortgage debacle, a number of individuals and groups are taking a closer look at the loans that made the mess possible. Adjustable rate mortgages, interest only loans, and their variations are estimated at $3.5 trillion now, and they are partly to blame for the record foreclosure rates. One occasionally-proposed method to dealing with the crisis is simply to make these types of loans illegal. Although that may sound like a plausible solution, it does not address the more fundamental causes of the foreclosure problem.
First of all, these types of mortgages have not been made illegal because they are voluntary contracts entered into between two consenting parties (the homeowners and the banks) who each had time to review, negotiate, or reject the contract before it was signed. Nothing illegal has been done in the vast majority of adjustable rate mortgages and many homeowners who have adjustable rate mortgages were able to pay them off or keep up with the payments. Eliminating an entire type of voluntary contract that is extremely useful and appropriate in certain situations does not eliminate the possibility that any other type of contract will be used when it is least appropriate. The contract itself, therefore, is not the problem, but how and for what purpose it was relied upon.
By far the largest percentages of people facing foreclosure are losing their homes because of a loss in income or medical problems. Less than 5% actually lose their homes because of a payment resetting, although it may contribute if there is another hardship. The subprime loans and resetting payments are significantly contributing to a sense of despair in the economy, and even a small decrease in the amount of people looking for new homes will begin to create a snowball effect, dragging down property values and decreasing profits developers can make from building new houses. So, the irrational fears created by these types of loans are creating instability in the market, but the usual causes of foreclosure still remain the overwhelming reason homeowners face foreclosure.
This is not to say that certain events during the mortgage application process may not have been unlawful, and fraud and negligence were obviously involved in some cases in order to pump up profits and take advantage of the real estate bubble. Specific aspects of creating contracts are illegal if they are discovered, such as disclosing material facts, not using intimidation, not giving contracts to people who can not reasonably enter into them, and making contracts with minor, to name a few. But when a husband and wife apply for a mortgage loan, sign disclosure statements that the rate will increase after 2 years, and state that they understand the terms of the contract, when they have not had the documents reviewed by an attorney or on their own, then problems will come up. The question is, who is responsible for making sure the homeowners understand what they are getting into? Obviously, no one except the homeowners can be certain if they understand completely or not, so it is up to them to raise any questions before going through with the mortgage. Otherwise, the bank will take silence to mean consent.
Again, these specific types of mortgage contract are not the real problem. More is going on in terms of lack of financial education, homeowners (and banks) not understanding how contracts work nor how to read them, and simple greed on the part of everyone involved. However, anyone who was pressured into getting an ARM or fraudulently induced into a loan should have some legal recourse to have the mortgage nullified and the lender punished. If these issues were addressed from the perspective of contract law, rather than just seeing homeowners who simply can not pay the mortgage, more than a voluntary federal program would be offered. But banks often have little to fear from lawsuits, as they hold more financial power and legal expertise than the average homeowner.
Outlawing a certain type of mortgage contract in an effort to protect homeowners from their own failure to understand the agreement they are entering into is no guarantee that the same problem will not crop up again in other areas. It is the underlying causes that need to be addressed, with community solutions and private education available to provide potential loan applicants with information necessary to evaluate the contracts they are considering. If this is not possible, and homeowners do not understand the mortgage, they need to have it reviewed by competent legal counsel. This can often be done for a few hundred dollars with the fees rolled into the new loan. Lawyers, though, should make certain the loan applicants understand the ramifications of the contract, though, and not just explain what it is while ignoring how it may play out over time. Homeowners themselves also need to plan for an uncertain future by establishing an emergency fund, saving as much as possible, and learning to live without extravagance if they have no self-insurance against the next inevitable financial hardship.
The ForeclosureFish.com website provides foreclosure help to homeowners in danger of losing their homes. Hundreds of pages of articles, blog entries, and reference materials are available to search through, with descriptions of nearly every known method of preventing foreclosure, including repayment plans, bankruptcy to stop foreclosure, and short sales, among others. You can find the ForeclosureFish website on the internet at the following: http://www.foreclosurefish.com/
Article Source: http://EzineArticles.com/?expert=Nick_Adama
http://EzineArticles.com/?Making-Subprime-Mortgages-Illegal?&id=895593
Mortgage Loan Specific links
Blinkx Video Search
- World's largest video search engine. Over 26 million hours of video. Watch it all!
-- http://www.blinkx.com/
Free Tech and Gadget Reviews!
- Watch GeekBrief With Cali Lewis on Mevio!
-- http://www.geekbrief.mevio.com/
Watch Funny Videos!
- Click here to see funny videos, pictures, jokes, commercials, and more funny stuff from Comedy.com.
-- http://www.comedy.com/
New Rap Music
- Search Emerging Artists & Help Vote Them Into Stardom. Join Today
-- http://www.ourstage.com/
Get Hired
- Earn more money with a better job now
-- http://www.hotjobs.com/
Mortgage Loan News
APB promotes Jones to mortgage loan officer (Capital City Weekly)
JUNEAU - Alaska Pacific Bancshares, Inc. President and CEO Craig E. Dahl announced that Megan Jones has been promoted from mortgage loan processor/closer to mortgage loan officer.
Read more...Mortgage Fraud Jumps by 45% on Fewer Loan Applications in U.S., Per the Mortgage Asset Research Institute (MARI) (PR Newswire via Yahoo! Finance)
Reported incidents of mortgage fraud in the U.S. increased by 45 percent on fewer loan applications in the second quarter of 2008 from a year ago, according to a new report released today by the Mortgage Asset Research Institute (MARI), a LexisNexis service.
Read more...ProSchools Helps Mortgage Brokers and Loan Originators Beat Deadline With Online Courses (PRWeb via Yahoo! News)
ProSchools receives approval in Washington to offer four new mortgage broker courses.
Read more...Brown Offers 1 Billion Pound Mortgage Loan Guarantee (Update2) (Bloomberg)
Dec. 3 (Bloomberg) -- Prime Minister Gordon Brown said the U.K. government will guarantee interest payments worth up to 1 billion pounds ($1.5 billion) owed by homeowners struggling to keep up with mortgages, an effort to prevent home repossessions.
Read more...Gary Umholtz joins RPM Mortgage (Sonoma Index-Tribune)
Gary Umholtz, longtime Sonoma loan consultant, has joined RPM Mortgage in their Sonoma Office at 827 Broadway. Umholtz is a senior loan consultant who has earned numerous awards for superior performance, volume and most importantly, customer satisfaction.
Read more...Mortgage leaders to speak Thursday in city (Explorer News)
National mortgage industry leaders Barry Habib and Sue Woodard from Mortgage Market Guide are coming to Tucson on Tuesday, Dec. 4, to speak about the root causes of the nation’s current financial circumstances, and “how Southern Arizona loan officers can alleviate consumer anxieties and offer individualized solutions,” a release said.
Read more...ICBA Partners with Wolters Kluwer Financial Services to Help Members Embrace Growing Mortgage Opportunity (Centre Daily Times)
As the number of people turning to their local community bank for a home loan grows, the Independent Community Bankers of America (ICBA) and Wolters Kluwer Financial Services have joined forces to help ICBA members better embrace this opportunity. Wolters Kluwer Financial Services’ complete suite of mortgage lending solutions can help financial institutions reduce regulatory compliance and ...
Read more...Mortgage Fraud Rises (The Tampa Tribune)
In a state that leads the nation in mortgage fraud, Tampa had the second-most cases of suspicious loan activity of any Florida city, according to a report released Tuesday from the Reston, Va.-based Mortgage Asset Research Institute.
Read more...Mortgage applications skyrocket in week (Moldova.org)
The volume of applications for U.S. mortgages jumped 112.1 percent last week, due to a big drop in interest rates, an industry group said.The Market Composite Index, which measures mortgage loan application volume, rose from 404.4 to 857.7 in the week ending Nov. 28, a week shortened by the Thanksgiving holiday, the Mortgage Bankers Association said in a release Wednesday.The Refinance Index ...
Read more...Mortgage applications more than double (CNN Money)
Mortgage applications more than doubled last week, a mortgage bankers' group said Wednesday, as government bailouts led to sinking interest rates that made refinancing especially more attractive.
Read more...