Every year, federal agencies propose new mortgage rules that can affect everything from buying homes, to getting loans, to selling homes. Here are the latest rules that are up for discussion:
If you're completely confused by all of the different numbers -- and you don't know how to tell a good loan offer from a bad one -- a potential new rule could help. That's because this rule is aimed at making it easier for people to compare loan options.
How would it work?
Because there are so many different combinations of fees and points, lots of homebuyers and refinancers are having trouble making sense of it all. If the rule is passed, lenders would be required to offer an additional loan option -- one that doesn't have any fees or points attached to it. That way, it will be easier to cut through the red tape and see what's good and what's not.
Faster service for homeowners who are in trouble
Right now, homeowners can apply for loan assistance if they think they're headed for foreclosure. But the way things sit right now, lenders can take as much time as they want to review those applications. In the meantime, homeowners are getting foreclosure notices while their assistance applications sit unanswered.
If passed, a new rule would require lenders to make a decision on those applications within 30 days. Plus, lenders wouldn't be allowed to move forward with the foreclosure process until they evaluate the application.
How many people could benefit from this rule?
As of July 2012, nearly six million homeowners had missed at least one mortgage payment. That adds up to a whopping 12% of all the residential loans out there!
New monthly statements
Another potential new mortgage rule would require servicers to send out monthly statements to borrowers. They would also have to notify homeowners about any upcoming changes in their interest rates or on their mortgage insurance.
What's the difference between a lender and a mortgage servicer?
The servicer is the middleman. They collect the payments on the lender's behalf and handle any customer service issues.
New appraisals for high-risk mortgages
If this rule is passed, certified appraisers would have to inspect homes that are attached to high-risk mortgages. The appraiser would have to go inside, inspect the interior, and write up a report. Then, the lender would be required to give a free copy of the report to anyone who's interested in buying the house.
And there's more…
If the person selling the house bought it for a lower price less than six months ago, a second appraisal would have to be done before he could sell it. That way, "flippers" wouldn't be able to use inflated appraisals to make more money.
But what exactly counts as a high-risk mortgage?
If your mortgage rates sit above a certain threshold, you're considered to have a high-risk mortgage. After all, the more money you owe to your lender, the lower your chances of being able to pay it all back!
When will these rules take effect?
Each one has to be evaluated by the U.S. Consumer Protection Agency. Final decisions won't be made until January 2013, so in the meantime, it's business as usual!
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