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Transparency in the Mortgage Industry

July 28, 2009 by  
Filed under Featured, Finance, National

99SkyThe mortgage industry is now being forced to take part in a positive new trend as we close out the new millennium’s first decade–transparency.  There’s no arguing that businesses which have modeled after this behavior have not only forced upon themselves the additional responsibility of maintaining a higher level of integrity, but have also shown to do more business.  Imagine that!  Some of the changes that are being proposed is to explain “fine print” in “plain English” so that the American home buyer can actually understand what they’re signing.  Hidden fees that pay a broker for selling a higher-cost loan are also looking at being banned.   Considering that competition may have been one of the industry’s ultimate self-inflicted causes for its own fall, competition will also likely diminish, since those that cannot make the procedural changes will be forced out of business.

The days of “creative lending” may thankfully also be a term of the past.  Those proposing new lending standards are suggesting borrowers first be offered a “plain vanilla” mortgage.  If a borrower is to be offered anything other than the likely 30-year fixed-rate mortgage (among other basic loans), people will be required to opt into them along with being warned that they are doing something unusual.

Bottom line is that lawmakers are working to prevent another mortgage crisis from happening again by making the process more understandable.  We suspect that the $8,000 tax credit will not be extended since it seems to have definitely increased buyer activity during a recession.  However, as the end of the year creeps upon us, there will be more of a need for buyers to remain educated on qualifying for a mortgage.  Here is a list of useful websites the Seattle Times put together:

Bankrate.com

http://www.bankrate.com/brm/green/mtg/mort1a.asp
Good primer on different types of mortgage borrowing.

Federal Deposit Insurance Corp.

http://www.fdic.gov/consumers/looking/
Features guidelines and tips for securing a mortgage.

Home Loan Learning Center

http://www.homeloanlearningcenter.com/MortgageBasics.htm
Discusses a range of borrowing topics, including qualifying for a mortgage and mortgage types.

Home Mortgage Calculator

http://www.home-mortgage-calculator.net/how-much-should-i-borrow.asp
Provides insights on how much to borrow for a mortgage.

Mortgage Info Center

http://mortgageinfocenter.com/tips/default.asp
Offers dozens of mortgage-borrowing tips over five pages.

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