the house will cost more
Washington, DC (PRWEB) May 30, 2006
The Homeowners Consumer Center (http://www.HomeownersConsumerCenter.Com) along with its partner the Mortgage Inspection service (http://www.MortgageInspectionService.com) have called for a national consumer alert to all homeowners about the realities of the current US mortgage market, in the form of five critical consumer tips they need to know. At the same time the Homeowners Consumer Center is seeking information about locally owned mortgage firms/lenders that are tired of trying to compete against dishonest mortgage lenders. The targets of this campaign are as follow:
1. TV Pitchmen promising consumers/homeowners they will get numerous mortgage firms to compete for a mortgage deal, or that someone should have called so and so. The problem; the sales pitch does not always measure up to what the consumer actually gets ( a much higher than market interest rate, ridiculous fees or both).
These same types of ads often times say, or talk about a "no point" gimmick, which is not exactly "no fees", if you are a consumer. The actual translation is the consumer just got a higher interest rate and a higher monthly mortgage payment.
2. National Homebuilders in many to most cases exclude borrowers from getting a competitive quote from local mortgage lenders. Typically the homebuilder prices the home buyers mortgage products 25 to 125 basis points over par (par=the best available interest rate for the borrower) and frequently these transactions are loaded with junk mortgage fees. If the borrower wants to get a competitive quote he/she or they get told, " the house will cost more", or they will not get a "bonus". What the homebuilder failed to tell the consumer is that because they are a "mortgage banker", they are not required to disclose the "yield spread premium" to the borrower=higher monthly mortgage payment. Mortgage brokers are required to disclose yield spreads to consumers.
A second severe problem with homebuilders is that they frequently tell appraisers what they want their homes to sell for, rather than allow the appraiser/appraisal firm to their job. "Either hit our values", the homebuilder wants (real or not), or they find another appraiser/appraisal firm that will. If there is a real estate bubble burst this year, it will start with homebuilders slashing their in some cases false valuations. Inflating real estate appraisals/massive appraisal fraud is the ticking time bomb that could potentially crush the US economy/real estate markets nationwide. Once again Wall Street was asleep at the switch for a disaster that could be worse than the S&L crisis of the 1980's.
3. Mortgage Lead generation scams on the Internet.: Once again the consumer/homeowner can get taken for a ride, or ends up with a much more expensive mortgage product. Most Internet providers have gladly sold advertising space to just about any lender, honest or not. Do business with local or well known mortgage firms.
4. Real Estate firms that also want to be the consumer's mortgage lender. We feel it is the ultimate conflict of interest for a real estate agent/firm to also be wearing the hat of mortgage lender. We believe the functions of real estate sales & real estate financing need to be separate. Next to national homebuilders blackmailing appraisal firms into unrealistic valuations, are real estate agents acting as mortgage lenders doing the same thing. Consumers are advised to steer clear of real estate agents/brokers also acting as mortgage bankers.
5. If anyone is looking to the Bush Administration, HUD, or the US Senate or House Banking Committees for help, don't hold your breath. In light of the Abramoff & Duke Cunningham Congressional bribery scandals one would hope that a consumer/homeowner friendly environment might exist. Nothing could be further from the truth.
In reality banks and mortgage bankers are not held to the same standards as are mortgage brokers with respect to serious consumer disclosure issues. At the very top of this list are 'yield spread premiums" (a kick back for increasing the mortgage interest rate).
Many have concluded, unlike mortgage brokers, banks and mortgage bankers are not being required to disclose these kick-backs because, they are the number one contributer to US House & Senate Banking Committees. President Bush had his Gala re-election campaign party in part financed by a mortgage lender that has been ordered to pay $300 million+ back to consumers.
The Homeowners Consumer Center (Http://HomeownersConsumerCenter.Com) and The Mortgage Inspection Service (Http://MortgageInspectionService.Com) want consumers/homeowners to understand these realities and at the same time they would like to partner with local, reputable mortgage firms/lenders that are interested in advancing educational campaigns in their communities so that consumers will be better educated when making application for mortgages or refinances. The goal of this campaign is to increase originations for participating mortgage firms/lenders & at the same time give the consumer an honest mortgage product/refinance.
The Homeowners Consumer Center also think it important that states and the federal government eliminate loop holes that prevent transparency in a mortgage transaction, regardless of a lenders status as broker, banker or the amount of money they contributed/paid to a politician.
Honest mortgage lenders/brokers who want to treat their customers with honesty are encouraged to contact the Homeowners Consumer Center ( Http://HomeownersConsumerCenter.Com ) for more information about a state by state campaign to get the word out about honest or hard working mortgage lenders. To join the Homeowners Consumer Center in this campaign, mortgage firms/ lenders will be required to agree to a realistic consumer disclosure agreement. A straight forward approach like this is long over due in todays mortgage world. Homeowners & consumers deserve better, and The Homeowners Consumer Center and its partner, The Mortgage Inspection Service think this is a very solid step to try to cure problems associated with an out of control mortgage industry.