The Federal Reserve approved new rules for home mortgage loans to protect consumers from questionable lending practices. Most of the new rules apply to subprime owner occupied home loans and go into effect 10-1-09.
Two of the best of these new loans are:
The lender must verify the borrower’s income and assets the borrower is relying on to pay the mortgage.
Lenders to escrow property taxes and homeowner’s insurance on subprime loans. This rule will be phased in during 2010.
The requirement to have escrow accounts on sub-prime loans should have been there all along but the lenders did not want the extra work. FHA and VA loans have always required escrow accounts because it addresses the stupidity factor. If you are not smart enough to save a down payment, you are obviously not going to save for your property taxes and insurance when they come due. So your lender has to set up a forced savings account to do it for you.
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Texas has always enjoyed the status of being a prime real estate market until foreclosures hit the state.
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Every time economists and Wall Street executives think they have acknowledged the full extent of the losses from the meltdown in real estate mortgages, more bad news turns up. At this juncture, economists say the troubles in the mortgage market could, all told, cost financial firms and investors up to $400 billion, far larger than the S&L crisis of the early 1990s. The loss in total real estate wealth is expected to range from $2 trillion to $4 trillion, depending on how far home prices fall, according to several economists. San Diego implant dentist