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New Rules In Lending
New Rules For The Lending Industry....And Everyone Around It! (edit/delete)
Something prompted me to totally change direction in what I was going to post tonight. I'm not going to give any long intro's or pull any punches. These are my thoughts on some things that need changed or that should remain as is, heck call me the new sheriff in town. Without further ado.... NEW RULES: Can you buy a home with no money? Short answer....No! Unless you are a Veteran, no. Is this a good thing? Absolutely!! Let me tell you why. As soon as you buy a home, if anything goes wrong (heating goes out, leak in the roof, appliances break down, whatever)....guess who's in charge of paying the bill? If you have no money in the bank, no cash in hand, no Reserves (as we like to call them)....you are in a bad situation. This is better for you, trust me on this one. 100% financing is alive and well but it is a heck of a good idea to have money in the bank after closing to be able to deal with the responsibilities of Home Ownership.
If a consumer has a fixed rate for, let's say, 2 years...which then becomes adjustable after that time has lapsed, you aren't allowed to attach a 3 year pre-payment penalty! That is unethical & in my mind....a financial crime! You know darn well that after 2 years the rate is going up and they will probably have to sell or refinance, don't penalize them for having to do so as their payment increases. A little bit of transparency folks, the individuals who make these loans make more money by putting people in them. Common Sense says, "There is no way anyone can rationalize why that's a good idea to begin with. Two year fixed rate, fine. Two year pre-payment penalty, fair enough. Anything longer is Uncivilized!"
Beginning with High-School and extending into College if that is the educational route one takes, the concepts of 'credit' and 'buying a home' should be taught. You want to teach us about the Real World, then do it! Quite frankly, the only thing I knew about 'credit' in either educational avenue is how to get extra of it...
Stated Income & No-Documentation loans are important products for certain professions and individuals. Let's dabble in some Common Sense folks. If you no longer offer the product, you leave many individuals unable to buy or invest in Real Estate who actually pay their Mortgage on time and genuinely need such products because of their situation. Knee jerk reactions aside, many of these loans perform very well and make perfect sense, don't kill the herd because a few sheep went astray.
Fine print should be put in BOLD! Don't get me wrong, the redundant disclosures in the majority of closing packages I've saw are more than giving borrowers the terms, facts, fees, etc....of what they are signing up to pay. Yet, these freaking commercials labeled with 'Low Introductory Payments' & 'Buy a $200,000 Home for a payment of $600.00 a month"are ridiculous and misleading. If I was your adviser, and if you are still reading....consider me just that, if there is fine print involved in what they are pitching, ask them to read it verbatim to you. Ask them to read it slowly and Ben Stein like.
Real Estate Agents shouldn't make loans and Loan Officers shouldn't sell Real Estate. In my mind, which is the only one I truly own, it's a conflict of interest. A loose analogy would be if my dentist was also a gynecologist. Multi-tasking only goes so far. I'll leave it at that.... |
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