Feds Overhaul Mortgage Disclosure Rules

New Focus On Payments To Brokers; Real Estate Industry Lobbies Against The Changes

(AP)  Prospective home buyers would get a simpler way to understand often-confusing mortgage terms under new rules issued Wednesday by the federal government.

The Department of Housing and Urban Development overhauled a 1974 law requiring lenders to give a so-called "good faith estimate" of mortgage costs, including lenders' payments to mortgage brokers.

HUD Secretary Steve Preston said in prepared remarks that "consumers deserve to understand this, and they need to get credit for essentially paying these premiums."

The government, which originally proposed revising these forms more than six years ago and released its latest proposal in March, says the new forms should save consumers around $700 in closing costs. The new forms will be required starting in 2010.

But changes to the stack of paperwork that consumers must sign before buying a house will have a big impact on thousands of real estate agents, mortgage brokers, banks and title companies.

The real estate industry had flooded HUD with complaints that the changes would be complicated and costly, and don't necessarily make the process easier for consumers to understand.

In theory, if borrowers had a better understanding of loan terms, they might have avoided some of the riskier loan products that became popular in recent years - such as subprime loans, or so-called option ARMs that allow borrowers to pay only the interest on the loan or even less, so the principal increases.

Minorities have been most abused, research shows. A study of 7,500 mortgages released in May by the Urban Institute and HUD found that black borrowers paid $415 more in loan fees on average than white borrowers. For Hispanics, the difference was $315.

"None of us can lose sight of the fact that millions of Americans simply don't understand all the fine print of their mortgages and this, in many respects, is at the heart of today's mortgage crisis," Brian Montgomery, HUD's Assistant Secretary of Housing, Federal Housing Commissioner, said in a prepared statement.

[au_fait]

They should shut down all the mortgage brokers out there doing this business i am now in the same sinking ship with finding out i''''m in an ARM and paying the lowest payment giving me Neg. Am.
Posted by cusefan21

Not to be mean, but if you did not realize you were getting an ARM, then you did not pay attention to the details of the loan. Can you read? I don''t understand how you would not know before hand. if you are older and easily confused, then I might give you a little credit, but then take a someone you trust with you.

[cusefan21]

They should shut down all the mortgage brokers out there doing this business i am now in the same sinking ship with finding out i''m in an ARM and paying the lowest payment giving me Neg. Am. and i called GMAC my so called mortgage company and they basically told me to miss some payments before they will do a loan mod what kind of *** is that when you call for help and they laugh at you.

[talkingham]

They should increase the penalty for mortgage brokers who intentionally mislead or lie to consumers. On my variable rate mortgage which I was smart enough to re-fi before the current self made crisis -- the representative of the loan company told me it could not reach the maximum rate until five years after the original rate ended. She however failed to mention that the fine print stated the loan could go to 90% of the max possible rate on the first day after the original variable rate expired. She falsely left the impression that the loan would take 5 years to get to a max or high rate. I''m sure this has happened to many people who were misled by the people they were doing business with.

[lochlan-2009]

By Mark Pittman, Bob Ivry and Alison Fitzgerald

Nov. 10 (Bloomberg) -- The Federal Reserve is refusing to identify the recipients of almost $2 trillion of emergency loans from American taxpayers or the troubled assets the central bank is accepting as collateral.

Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson said in September they would comply with congressional demands for transparency in a $700 billion bailout of the banking system. Two months later, as the Fed lends far more than that in separate rescue programs that didn''t require approval by Congress, Americans have no idea where their money is going or what securities the banks are pledging in return.