Home sales are coming back in most parts of the country, Kentucky included. But they could be coming back faster if congress would make minor changes to regulations affected mortgages. Specifically, the problem with qualifying for bridge loans needs to be addressed.
The economy is improving, but people are still nervous, and so are lenders. Many people who are attempting to sell their homes and buy new homes are finding that they're not qualifying for the bridge loans they need to temporarily carry two mortgages.
It's the rare person indeed who has the means to pay two mortgages simultaneously. This means that millions of would-be home buyers are stuck, unable to get the bridge loans--or "gap loans," as they're often called--to let them buy their new home while their existing home waits to be sold.
There are many proposals to remedy this problem. For realtors in Kentucky and Indiana, the problem with tight credit for those changing homes is affecting our sales. A call to our congressmen is in order.
Wednesday, July 22, 2009
Wednesday, June 17, 2009
Changes in Kentucky Mortgage Laws
The Kentucky legislature has joined legislatures in many other states in enacting bills to more tightly regulate the mortgage industry.
New legislation for 2009 will affect how Kentucky mortgage lenders do business.
The new legislation has established a Kentucky Homeownership Protection Center that provides assistance to homeowners who are in or near default.
The new laws also require Kentucky mortgage lenders to provide a "Notification to New Homeowners of the Kentucky Homeownership Protection Center" document to all borrowers.
Getting down to the meat of the issue, though, the law establishes penalties for anyone who attempts to rig an appraisal, either in the reporting, the development of the appraisal, the result or the review.
The new legislation also places controls on soliciting leads from consumer credit report requests by making it illegal for someone to not inform the potential customer that the solicitor is not affiliated with the mortgage company the customer was dealing with initially, for the solicitor to conform to state and federal laws regulating the use of consumer reports for solicitations, for the solicitor to contact anyone who is on a "no call" list, or for the solicitor to offer rates, terms or costs that the solicitor knows will be changed to the detriment of the consumer.
Kentucky mortgage lenders, including anyone who processes mortgages, must now register with the state Department of Financial Institutions, and go through educational classes.
The legislation also affects the mortgages by limiting prepayment penalties to three years after the mortgage was issued, or 60 days prior to the first interest rate reset. Prepayment penalties are limited to 3% for the first year, 2% for the second, and 1% for the third on the outstanding balance of the mortgage. Furthermore, no prepayment penalties can be charged to a borrower who is refinancing with the same mortgage company that funded the mortgage.
The new legislation establishes standards that Kentucky mortgage lenders must abide by, and raises violations of certain standards to felony level. The law also creates a mortgage fraud prosecution account that is funded by civil penalties. The funds are used for the criminal prosecution of mortgage fraud.
Expenses that Kentucky mortgage lenders may charge are now limited to $2000, or 4% of the total loan amount, whichever is greater. Expenses subject to the limits are origination fees, broker fees, lender fees, discount points if retained by the originating person as income, processing fees, administrative fees, document preparation fees, yield spread premiums, servicing release premiums and financial counseling fees. Interest on the mortgage itself, or payments to an unaffiliated third party, are not included.
This legislation--House Bill 552--was signed into law in April of 2008. Kentucky lenders, along with Indiana mortgage lenders, and lenders in dozens of other states will no doubt emerge from the new requirements with increased public respect.
New legislation for 2009 will affect how Kentucky mortgage lenders do business.
The new legislation has established a Kentucky Homeownership Protection Center that provides assistance to homeowners who are in or near default.
The new laws also require Kentucky mortgage lenders to provide a "Notification to New Homeowners of the Kentucky Homeownership Protection Center" document to all borrowers.
Getting down to the meat of the issue, though, the law establishes penalties for anyone who attempts to rig an appraisal, either in the reporting, the development of the appraisal, the result or the review.
The new legislation also places controls on soliciting leads from consumer credit report requests by making it illegal for someone to not inform the potential customer that the solicitor is not affiliated with the mortgage company the customer was dealing with initially, for the solicitor to conform to state and federal laws regulating the use of consumer reports for solicitations, for the solicitor to contact anyone who is on a "no call" list, or for the solicitor to offer rates, terms or costs that the solicitor knows will be changed to the detriment of the consumer.
Kentucky mortgage lenders, including anyone who processes mortgages, must now register with the state Department of Financial Institutions, and go through educational classes.
The legislation also affects the mortgages by limiting prepayment penalties to three years after the mortgage was issued, or 60 days prior to the first interest rate reset. Prepayment penalties are limited to 3% for the first year, 2% for the second, and 1% for the third on the outstanding balance of the mortgage. Furthermore, no prepayment penalties can be charged to a borrower who is refinancing with the same mortgage company that funded the mortgage.
The new legislation establishes standards that Kentucky mortgage lenders must abide by, and raises violations of certain standards to felony level. The law also creates a mortgage fraud prosecution account that is funded by civil penalties. The funds are used for the criminal prosecution of mortgage fraud.
Expenses that Kentucky mortgage lenders may charge are now limited to $2000, or 4% of the total loan amount, whichever is greater. Expenses subject to the limits are origination fees, broker fees, lender fees, discount points if retained by the originating person as income, processing fees, administrative fees, document preparation fees, yield spread premiums, servicing release premiums and financial counseling fees. Interest on the mortgage itself, or payments to an unaffiliated third party, are not included.
This legislation--House Bill 552--was signed into law in April of 2008. Kentucky lenders, along with Indiana mortgage lenders, and lenders in dozens of other states will no doubt emerge from the new requirements with increased public respect.
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