After the subprime mortgage crisis, which began to surface in 2008, the Maryland Legislature passed The Real Property-Maryland Mortgage Fraud Protection Act in April of that year. The Maryland Legislature passed several laws to help homeowners who are at risk of losing their homes, and to prevent future homeowners from becoming at risk for losing their homes. From a realtor’s point of view, the most notable issues are the changes to the lending industry: * Lenders will now be required to be licensed, and all mortgages must contain the license number of a mortgage originator or mortgage lender. This would allow regulators to track which mortgage providers have the highest foreclosure and default rates. * Changes in the number of days until several steps of the process take place: The foreclosure sale cannot occur sooner than 135 days after default. * SB218/HB 361 establishes requirements for a foreclosure consultant. All of the details of this professional will be fleshed out in the future. Suffice it to say, the foreclosure consultant will be trained and probably licensed, not a real estate agent or bank representative. The consultant will have a fiduciary responsibility to the homeowner, similar to a RE agent, and will counsel the homeowner in all the aspects of the process. * The third bill passed establishes stricter penalties for anyone engaged or intending to engage in mortgage fraud. Overall, I think these are some great steps toward preventing further fraud and helping homeowners in trouble. I especially like the licensing of lenders. It will make it possible to track fraud and actually find the people who are initially responsible. The inability to hold lenders accountable has been a huge hole in the ability to prosecute fraud.
No More Stated Income Loans Shortly after this law was passed, The Maryland General Assembly passed House Bill 363, outlawing Stated Income loans in the state. Any loan applications made after June 1st, 2008 cannot be stated-income, or reduced documentation, or no-doc loans.
The are advantages and disadvantages to borrowing 90% of the purchase price from a mortgage lender so it’s your job to see if this type of mortgage is right for you. When applying for a home loan the bank will want to know your level of income and how stable your employment is. You’ll also need to calculate your monthly expenses including food, bills, credit cards etc. If you intend applying for a home loan with your partner then both your incomes and expenses will need to be considered.
The purpose, as I understand it, in the low-doc and no-doc loans was originally to help self-employed people (like me!) get loans they otherwise couldn’t. When you’re self-employed, your accountant will advise you to write off all that you legally can so that you have less net income to be taxable. You can make a hundred thousand and end up with 50 thousand to call income. The problem with that is that it’s hard to get a mortgage. Stated-income loans were originally designed for self-employed people with 700+ credit scores, and they usually had to put 20% down. Most borrowers were over age 40. These are not the people who are at risk of foreclosure. So the stated-income program really works for these self-employed. The problem, of course, is that abuse took place. So, naturally, the answer is to throw the baby out with the bath water. No more no-doc loans, period.
Make sure the lender has a good reputation with home loans or with first time home buyers. The cheapest mortgage company is not necessarily the lender you should go with. You want to compare the best 90% mortgages available and find the cheapest rate for your 90% ltv mortgage.
Like the no-doc loans, ARMs have a purpose and are a good product for certain buyers. Buyers who don’t plan to stay in their homes for a long time may find an adjustable-rate mortgage better suits their needs than a fixed-rate loan. And like no-doc loans, these ARMs have been abused, causing many homeowners to face higher adjusting rates at a time when their home values were plummeting, making it impossible to refinance.
To find out who is offering 90% mortgages in your area do a Google search and remember to include your town or city when you do the search.
FHA loans also require a home appraisal to determine its value and ensure its safety. An inspection may not be required, but is highly recommended. Additionally, a mortgage insurance premium has to be paid under the FHA loan. The insurance premium can be rolled into the loan, thus eliminating out-of-pocket expenses. Lastly, applicants need to be aware that FHA loan limits vary by location and are typically lower than conventional loans.
Paul Amos is an Author living in Sydney, His latest website is about Construction manager and leading Comercial Construction company gran variedad de los juegos m?s excitantes y adictivos
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