White House: Helping Buyers by Simplifying Loan Process

17 March 2008

Author: admin Posted under Mortgage

The White House is set to unveil a new proposal that will provide potential home buyers with basic mortgage terms information and savings in closing costs that amounts to $700.

This proposal is based on a 1974 law that required lenders to offer a “good faith estimate”. The said estimate will help buyers compare mortgage terms much easier if they do decide to buy a home or refinance an existing mortgage.

According to the Secretary of the Department of Housing and Urban Development, Alphonso Jackson, the current foreclosure crisis is actually the result of borrowers who failed to understand the entire lending process. Because of this lack of understanding, many of these borrowers, particularly those who took out adjustable rate mortgages, were not able to meet their mortgage obligations especially when interest rates reset.

Although this proposal aims to benefit the buyers, the mortgage broker industry is not in agreement. One of the reasons is the required disclosure of the amount that the lenders pay brokers, more commonly referred to as yield-spread premiums. These premiums are payment to brokers for steering potential buyers towards particular lenders. Advocates remain at odds with this practice since it prevents buyers from enjoying the most competitive rates and mortgage terms.

The new proposal actually followed the recommendations made by the Treasury Secretary to improve the regulation of mortgage lenders in order for the market to recover quickly.

If you are currently in the market for a new home, the new proposal will certainly be of great assistance. Even if you choose to buy one of the many foreclosed properties for sale, you will still have to make an effort of understanding each of the terms and conditions stipulated in your mortgage contract.

Brokers like Foreclosure Support can actually provide you with expert advise and professional assistance as well as listings of the hottest foreclosed homes in the market today.