I get this question a lot. Why would you and why wouldn’t you….Let’s look at the options.

What is a point? 1% or your loan amount. If you borrow $200,000, then 1 Point = $2,000.

This would be $2,000 in addition to what you would normally spend on your normal closing costs if you are obtaining a conforming fixed rate loan. Most of the time on a normal, conforming Fixed Rate Loan you don’t have to pay points unless you have a smaller loan, or because you want to “purchase” a lower interest rate on the loan for the life of the loan.

So what does $2,000 “buy” you? About .25% off of your interest rate. Instead of getting 6.375% you would get 6.125%. On a $200,000 loan this would lower your monthly payment by about $32. On a cash basis you would give up $2,000 to the lender to get back $32 every month, which you would make up for it after about 62 months on a simple division calculation.

You can slice numbers a lot more than this. You can look at the fact that most people can deduct the cost of the point from their tax return as a deduction, and the argument for paying the point would say that its not costing $2,000, its only costing $2,000 minus your tax savings. Or you can calculate the rate of return on an annual basis of your “investment” in the point, and find that it appears that there is a juicy “guaranteed rate of return” on this “investment”.

This is fine, and you can go crazy working out the numbers, but there is one major universal truth, indisputable in the world that encourages me to disregard those calculations and never willingly pay points to buy down an interest rate:

LIFE HAPPENS.

All of those calculations assume that you will keep that mortgage and that house for a certian period of time. Statistics show us that more people move within 7 years and refinance once before doing so than those that stay in a house and mortgage for a longer period of time. And if you give up your cash in a fee to save some money per month…and Life Happens to you (you have to move refinance, etc.) there is no investment left. Just a lost fee that you chose to pay. And really – if you save $32 a month where do you think that money will end up? Will the $32/month really end up saved, or consumed in your lifestyle. Instead of “buying” the point, I would speak to your Financial advisor about putting the $2,000 into a vehicle that can be a real investment, not a fee disguised as one. This way the $32/month is really captured up front in the form of the $2,000 investment, which if manged properly will still be there if LIFE HAPPENS to you. You might even be able to get a tax deduction on the investment just as you would have on the point.

The Problem With My Industry

The biggest problem in my industry is we have an incredibly powerful financial tool being sold by people probably not qualified to do so. In the money world, a $200,000 financial instrument is a very serious instrument for most homeowners – one of the most impactful financial instruments they have. It controls one of their biggest assets (home) and takes up a larger percentage of their cash flow on a monthly basis than almost anything else. For many people their mortgage is their largest expenditure per month. And it is frankly scary who my industry allows to sell these instruments. Anyone that can pass a simple test can now be a Loan “advisor” – but what most of them are really doing is selling money.

Where am I going with this! Back on course. The money that you get to buy or refi your house comes from the same pool of money on Wall Street which is buyers of “mortgage backed securities”. Virtually all of the money for the best interest rate loans comes from this place – so the real cost of money is relatively equal throughout the industry. No one has a “hidden source” for money that they are funding really low rate loans with.

What they DO have is flexibility in how they PRESENT what they have to offer.

You see, I could advertise a 5.25% rate if I wanted to, but you would have to “buy” the rate down to that level. We could also give you a loan with no closing costs, which we acheieve by giving you a higher interest rate and using the money the market pays for that rate to cover your costs….It is manipulative. And if you are working with the right person YOU can choose how to manipulate the money. If you want a lower payment and want to buy it down, then you can, or reverse it up and take no closing costs and a higher rate. If you are not working with the right person, then it is THEY who are doing the manipulating and because you don’t know as much as them – THEY are manipulating YOU instead of YOU manipulating the MONEY.

Ever had someone talk over your head and felt like – how can I argue with that? I don’t know enough…..well I am sure you know of someone who has had that kind of experience with a mortgage company. You will not have that experience with the right person. They should be crystal clear in their dealings and never use “mortgage speak” to get you to agree to something you do not understand.

This is why most people shop completely wrong for their mortgage. There are a multitude of people who will tell you what you want to hear, which is that they have the best rate in town. But is it the lowest cost? Many times not. Is it the right program, which puts you in the best place to have financial success? If so, it was by accident, rather than a thorough explanation of the mortgage options and how they relate to your financial plan. Working with some of these people with a financial instrument as big and important as your mortgage is like shopping for the cheapest Doctor in town to take care of your health. While what we are talking about is not as important as your health, your financial health is very important! It should not be placed in the hands of a good “salesperson” with their own agenda. I have a guide to selecting the right mortgage professional available at the website below.

During poor economic times, many will suffer detrimental effects to their credit histories. And due to their poor credit rating, they will have difficulty obtaining a refinance loan. But even so, obtaining a bad credit refinance loan remains possible. In reality, there is an increasing number of lenders dealing specifically in these kinds of loans.

When you have a poor credit rating and you need to refinance your loan, you generally find it to be difficult as the majority of lenders will not want to help you. But there are bad credit home loan refinance firms which make it their business to assist in these situations. Usually these loans are easy to fill out, and they are processed quickly.

Should you be seeking a refinance loan to enhance your credit score or to avoid the foreclosure of your home? If so you can find the best loan provider either online or offline. By so doing, you will be able to locate lenders who can offer competitive rates for the kind of loan you are seeking. In order to help you in your search for a company, you will find below several items of which you should be aware.

You must perform an extensive search for the loan provider willing to assist you with remortgage loans. An online search will certainly result in numerous companies offering such loans and who may be amenable to assisting you. Regardless of whether you are refinancing to better your credit ranking or to avoid the foreclosure of your home, these loan companies exist to work with you to come up with a plan which will best coordinate with your particular situation.

While you are searching, you must create a listing of the lenders willing to analyze your specific situation and who are interested in providing you with the bad credit home loan refinance for which you are looking. Having listed and considered them all, you can come to a final decision as to the best offer for your situation. Following that, you can then go ahead with the formalities and gather the necessary documentation to obtain the loan.

Prior to closing on the loan, make certain that there are no hidden costs or fees attached to the loan. Make certain that the terms which have been put into the refinancing loan are understood, agreeable to you and that you can handle the monthly payment without any trouble. It is vital that the monthly payment on the new loan be lower than your present payment. You do not want to come out of this process with a greater payment than that with which you began because this is supposed to help and not hinder your financial situation.

The above are various suggestions meant to assist you in your search for a bad credit refinance loan.

Texas investment property loans – acquiring rental property

As of midnight march 13ths I lost 2 deals due to Wall Street. Yes Wall Street has drastically cut back on 2nd liens , particularly the high LTV loans (90-100%) that I have been doing for investors for several years. What does this mean? It means that the days of the 0 down investment property mortgage is probably over, at least for now.

I want to talk about one strategy that I personally use to acquire rental property. I never really thought it was a great idea to buy rental property with a 0 down loan, unless you were purchasing at a minimum of 80% of market value, which most buyers fell short.

When buying rental property how do you eliminate 98% of buyers (not hard to do these days with subprime fallout?) Find properties that are not lendable by conventional Wall Street mortgages. Properties that the appraisal would read below average or have any roof or foundation damage are good candidates. Bottom line, if you would move your dear old Granny in the house it’s probably ok, if not you have found your bargain.

0 down investment property funding-putting the pieces together

Now that you have found you deal, get your financing. I’m going to keep it simple.

1. Get a local bank loan (most require 10-20% of the total cost of purchase and repair).

2. Use secured or non-secured lines of credit. You will be surprised what your bank will allow if your credit is good, 680 or better.

3. HARD MONEY, yes my company will find these loans. Typically rehab/hard money will 65 – 75% of ARV (after rehab loan to value). These are short term loans, 12-15% interest.

The conclusion is “Rehab to Rental”. Simply refinance your hard money note at 75% of current value of your property. It’s called a rate/term refinance, most of my lenders do not have a title seasoning issue with this loan. You now have 25% equity the day your renter moves in, you have a much better rate than a typical (now in the past) 0 down loan and you still have less cash in your property than if you had purchased 0 down because all closing costs are rolled into the loan.

My website below explains more.

Bad credit home equity loan information helps a credit-damaged borrower secure a loan based on home equity. It also assists the borrower in assessing the credit risk involved. Most bad credit home equity loan providers offer home equity loans irrespective of an individual’s credit history, since they have the guarantee of the home. Bad credit home equity loan providers assess a client based on his credit report. They assort clients into different categories. Most lenders excuse moderate blemishes if there is a reasonable explanation.

The maximum credit limit that can be taken on home equity is calculated by subtracting any existing balance on a previous mortgage from the present appraised value of the house. The income, debits, and repayable capacity of the borrower reflect on the loan amount. In cases of bad credit, lenders usually give only up to 80% of the appraised value of your house. Many lenders can be convinced to grant a greater percentage of appraised value on negotiation, sometimes up to 125%.

Bad credit home equity loans are preferred for many reasons. The interest rate of an equity loan is comparatively low. However, bad credit borrowers are sometimes made to pay higher than market interest rates by some lenders. Tax exemption is another attraction, permitted in cases where the loan amount is used for home improvement or purchase of another home.

A standard home equity loan and a home equity line of credit are the two main types of equity loans. In a standard loan, the amount is released as a lump sum at the beginning, whereas in credit line, the assured amount is accessed part by part in intervals. It is advisable that you make a thorough comparative study of the various lenders and their loan plans before you opt for a bad credit home equity loan.

With today’s low interest rates and available home inventory, now is a great time to buy a home using an FHA loan. Getting the funds for the downpayment and closing costs are the single biggest obstacle to home ownership. Using FHA underwriting guidelines, a borrower will learn how to get these funds from a variety of sources.

Strategy 1

Down payment funds can come from several approved sources. First of all, if the borrower has a 401K they may borrow or withdraw funds for the purchase of an owner occupied home. That means the borrower is going to live in the property. Some 401K plans require a payback of the funds withdrawn so the borrower must check on that through the plan administrator. If a payback is required, the monthly payback amount will be added to the monthly debts the borrower already has to determine qualification for the home loan.

Strategy 2

Relatives and close friends may give a gift to the borrower for the downpayment or closing costs. The borrower and donor will both sign a document that the money is a gift and no repayment is required or expected. If the borrower is using a close friend, the relationship must be long term and well documented. A borrower may use as many relatives and close friends as needed to get the required downpayment and closing cost money. Some borrowers have gone to as many as 20 relatives or close friends for small amounts of gift money. For example, if the borrower is considering a home costing $150,000, the required downpayment would be $5,250. If each relative or close friend gave $300 as a gift, the borrower would have their downpayment money. Also, a relative or close friend may borrow the gift money to give to the borrower. However, the borrower cannot be a party to the loan or have any financial responsibility for repaying it. FHA has specific rules regarding the documentation of the gift funds. They are precise, but not onerous.

Strategy 3

Another source for downpayment money can be the borrower’s employer. It is permissible for the borrower’s employer to also give a gift to the employee/borrower. Generally, the employee/borrower is a great asset to the company and the company recognizes that through the gift. The borrower should check with their Human Resources Department for more information. Again, the same rules for gifting apply.

Strategy 4

Under FHA guidelines, the seller of a property may contribute up to 6% of the sales price toward the borrowers closing costs and prepaid items. The seller cannot contribute any money for the downpayment. By definition, prepaid items are generally loan interest, hazard insurance policies and property taxes. An escrow account is set up with the mortgage company to pay the property taxes and hazard insurance as they come due. The yearly amount needed is divided into 12 equal payments and added to the principal and interest payment. This eliminates the need for the borrower having to come up with those costs at the end of the year.

Strategy 5

In addition, the borrower can select a slightly higher interest rate to help pay for required closing costs and perpaid items. As little as a one half percent increase in the par interest rate can yield up to one percent in a rate premium. Put another way, the higher rate would produce $1500 to the borrower for payment of closing costs and prepaids. That is based on a sales price of $150,000. Even with the higher rate, the borrower is ahead by about four years versus if they had paid the $1500 out of pocket.

Using these strategies will enable a borrower to buy a home sooner and begin enjoying the benefits of home ownership.

Just because you have poor credit doesn’t mean you can’t refinance your home mortgage loan. According to loan officer, Brendon Daly, refinancing your home or adding a second mortgage can help your credit rebound significantly, and will often increase your credit scores with timely payments.

Even with bad credit, as a homeowner, you have several options available to you through the subprime (also known as non-prime) mortgage market including:

o Refinancing with a cash back or debt consolidation loan to help you rebuild your credit and raise your low credit scores by consolidating your 1st and 2nd mortgage loans, and using the extra cash from your home equity to wipe out compounding credit card interest and consolidate your debts.

o Refinancing your variable interest rate first mortgage, second mortgage or home equity line of credit (HELOC) into a fixed interest rate loan which can save you thousands as interest rates continue to climb.

o Cashing out your home’s equity to finance home improvements. Your timely payments will help you rebuild your credit as you build more equity and value into your home.

o Refinancing with a 40 year fixed rate loan, an interest only loan or a hybrid loan if you’re short on money and have a hard time paying your bills. The monthly savings off your mortgage payments could provide some much-needed financial relief as you work towards getting back on your feet. Hybrid loans are a combination of fixed rate and adjustable rate mortgage (ARM) loans, which is why they are also known as “combo mortgage loans.” These loans give you a lower interest rate than fixed rate loans and are less risky than 1-year ARMs.

Bankrate states that subprime mortgages are for borrowers with FICO credit scores under 620. Bankrate goes on to say that subprime loans have higher rates than equivalent prime loans. How much higher depends on factors such as credit score, size of down payment, and what types of delinquencies you’ve had in the recent past. From a mortgage lender’s standpoint, late mortgage or rent payments are worse than late credit card payments.

According to the Mortgage Bankers Association, in 2003 the lenders issued over $276 billion in subprime mortgage loans, roughly 14% of all mortgages, compared to 11% in 2001. The subprime mortgage market witnessed a boom since the 1990s. As a result of this boom, subprime customers seeking bad credit mortgage loans or mortgage loan refinancing no longer have to settle for the first lender that will provide credit. The increased competition within the subprime market has resulted in putting borrowers more in control of lending process by providing them with more choices in lenders and more ways to shop around for the most competitive rates.

Depending on what your situation is, you may end up with a loan that doesn’t carry that much higher an interest rate than a traditional 30 year fixed rate mortgage, and the fees could end up being fairly reasonable. No matter what, though, the rates you get on your bad credit mortgage loan through a subprime lender will definitely be a lot lower than credit card and auto loan interest rates. Besides, you may be able to claim 100% of the interest you pay on your bad credit mortgage loan as tax deductions.

Another thing to remember is that you may be able refinance with a lower interest loan once your FICO credit scores rise to 620 or higher, but you’ll get better interest rates and loan terms once they’re over 650. Janette E. Jones, a mortgage consultant in Bethesda, Maryland states that if your credit score is 650 or above steer away from subprime lenders because you can find a better rate elsewhere. So, refinancing now with a bad credit mortgage loan through a subprime lender may be just what you need to start rebuilding your credit and raising your FICO credit scores in the short term, so you can look forward to paying much lower mortgage rates on a new refinance or second mortgage with much better loan terms later on down the line.

Prospective home buyers have more choices than ever before for home financing. Traditional FHA and VA loans are still available, but lenders offer a wide variety of other options for first-time and returning borrowers.

Conventional loans

The traditional method of financing a home, these are usually 15-year or 30-year fixed interest loans.

FHA and VA insured mortgages

These low-cost fixed-rate mortgages are available to certain home buyers on properties that meet stringent federal standards; however, FHA loans can sometimes be designed to include rehab costs for properties in need of repair. The seller generally pays points on FHA-insured mortgages, and always does for VA loans. VA loans require little or no down payment.

Adjustable rate mortgages

Adjustable rate mortgages offer fluctuating interest rates based on a financial index; typical indexes used include the Cost of Funds Index and the interest rate on one-year constant-maturity U.S. Treasury securities. While these mortgages usually offer a discounted rate at the start, they often can result in higher interest rates and consequent higher monthly payments, creating difficulties for some borrowers.

Graduated payment mortgages

These newer fixed-rate mortgage arrangements allow buyers to purchase a more expensive home than they might otherwise be able to afford, with payments increasing gradually over the life of the loan. One drawback to these loans is a side effect known as negative amortization; put simply, payments in the early stages of graduated payment loans may not cover the interest due, increasing the overall amount of debt on the home. This can result in negative equity, a major difficulty if the borrower wishes to sell the home during the first ten years of the mortgage’s life.

A variation on the graduated payment mortgage is the adjustable graduated payment plan; this works on the same principle, but the interest rate varies according to a financial index. Because payments are gradually increasing, interest rate hikes can produce unpleasant “sticker shock” for unprepared borrowers.

Balloon payment mortgages

Available as fixed-rate or adjustable-rate loans, these mortgages are short-term loans, usually lasting five to ten years. At the end of this term, borrowers are required to either pay off the entire remaining balance, or to refinance at the prevailing rates at that time. These mortgages are primarily useful for borrowers who expect the interest rate to decline within the next five years and intend to refinance when that occurs.

Assumable mortgages

By assuming an existing mortgage, sometimes with an additional up-front payment, borrowers can often obtain a lower interest rate than the prevailing market will allow. The lender must approve of the arrangement, and the borrower must be creditworthy in order to qualify. Most FHA and VA mortgages are assumable for qualified buyers.

Austin homebuyers can learn more about these mortgage options and many others from the loan experts at Capital City Funding. Conveniently located within the offices of Capital City RE/MAX, this FHA and VA approved in-house lender provides a wide range of financing options and services for home buyers. Affinity Properties, in conjunction with Capital City RE/MAX, is proud to offer these lending services to their clients; together with RE/MAX, Affinity Properties is committed to providing the highest levels of customer service and convenience to home buyers and sellers throughout the Austin area.

Continuous declines in United States’ housing values after the mid-2000s caused an increasing number of borrowers to explore the loan modification process in an attempt to avoid losing their homes to foreclosure. Unfortunately, a large number of homeowners who sought to have their loans modified were thwarted by lengthy and impersonal negotiation processes imposed by lenders, the borrowers’ inability to qualify for modified loans, and the unwillingness of banks to modify loans to affordable levels. In addition, too many of the borrowers who were able to successfully navigate through the loan modification waters later learned that their diligent efforts were ultimately in vain as the United States Comptroller of the Currency reported that over half of the loans modified in the first quarter of 2008 went into default within six months. In order to prevent the loan modification process from beginning to resemble a futile quest for the Holy Grail, it is essential to examine some of the key issues surrounding loan modifications.

Loan Modification Goals

Generally speaking, the primary reason that borrowers seek to have their home loans modified is to reduce the amount of their monthly payments. This result can be achieved by reducing the interest rate of the loan, extending the repayment period of the loan, preventing an interest rate from adjusting upward, reducing the principal balance owed, eliminating a negative amortization term, adding delinquent payments to the balance, or any combination of the aforementioned. It is not surprising that the modification goal most sought by borrowers also happens to be the request lenders have been most unwilling to grant: principal balance reductions. Although reductions in balances create significant losses for banks, it should also be noted that homeowners have been generally unwilling to continue to make mortgage payments when they believe that their home’s value will not exceed the amount that they owe against the property.

Therefore, the failure to reduce balances via the loan modification process, coupled with declining housing values, may account for the U.S. Comptroller of the Currency’s finding that the majority of loans become delinquent shortly after being modified.

The Process

Although loan modification procedures and requirements vary from bank to bank, the typical process begins with a borrower contacting the bank’s loss mitigation department to request a loan modification. The lender will then send a loan modification application and forms to the borrower to be completed and returned to the lender. The bank will also require other documentation to be provided by the borrower in support of the application. This documentation may include bank statements, tax returns, pay stubs, a hardship letter and an appraisal or broker’s price opinion to show the current value of the property. After all of the requested documentation has been received by the lender, a bank representative or negotiator will eventually contact the borrower to make a proposal of the new loan terms or simply reject the initial modification application altogether. The borrower then either accepts the bank’s proposal or negotiates new terms until an agreement is reached and new loan documents are formally executed. It is also advisable for the borrower to regularly contact the loss mitigation department throughout the process to ensure that all documentation is being received and that the modification request is proceeding in a timely fashion.

Obstacles to Modification

The most obvious obstacle to successfully modifying a home loan is the borrower’s inability to qualify for the new modified loan. Once again, lender eligibility requirements for modification can differ greatly. However, Fannie Mae and Freddie Mae have implemented a Streamlined Modification Plan to more effectively respond to the increasing number of loan modification requests. Under this plan, the borrower must satisfy the following criteria: 1) the borrower has not filed bankruptcy; 2) the borrower’s existing loan was originated prior to January 1, 2008; 3) the property securing the loan is owner-occupied and a single family residence; 4) the borrower is at least 90 days delinquent on the existing loan; 5) a 90% or higher loan-to-value ratio is present with the existing loan; 6) the payments after modification do not exceed 38% of the borrower’s gross monthly income; and 7) the borrower must successfully make 3 consecutive monthly payments after modification to demonstrate an ability to pay before the modification is formalized.

Also, lenders are generally under no legal obligation to modify loans for borrowers. Consequently, if a modification request becomes too cost prohibitive, banks will often take their chances with the foreclosure process instead. Lenders may also have inadequate staffing to handle the increasing number of modification requests without frequent borrower follow-up. A borrower’s property might also serve as security for more than one loan, and it can often be challenging to coordinate modification terms between multiple banks. Further, if the loan has been sold by the bank on the secondary loan market to any number of potential investors, the original loan will often be split into different fragments before pooling them with other portions of loans as mortgage-backed securities. In this case, it can be very difficult to coordinate with the many investors to obtain approval for the modification.

Finally, borrowers should be weary of a large number of fraudulent companies attempting to assist homeowners with the loan modification process. The mere fact that these companies are using seemingly reputable television commercials or websites as advertising mediums should not alleviate a borrower’s concerns. The rapidly increasing number of loan modification scam-artists has temporarily caught law enforcement off guard and it may take some time before these culprits are apprehended and their brazen actions are quelled. In the meantime, borrowers should be especially cautious when dealing with companies that demand fees in advance of any services to be provided as this practice in and of itself is prohibited by most state laws.

For further assistance with the loan modification process, it is advisable to contact an attorney or your local REALTOR®. In addition, the U.S. Department of Housing and Urban Development has a list of approved housing counseling agencies at http://www.hud.gov. When a borrower attempts to personally modify a home loan, it is essential to identify modification goals, understand the particular lender’s modification requirements, frequently check on the status of the application’s processing, and by very patient.

As of Monday July 14th, 2008, the government has passed new laws which cause a decent amount of change within the mortgage industry and how these companies give out loans to homeowners. Even though they were passed on Monday, these rules wont take effect until October 2009 to give time for companies to transition to the new set of standards.

The concept being birthed in 2007, was in response to the treatment homeowners were facing from mortgage companies and to the foreclosure crisis that took place. It has been stated that the basis for these new rules are to protect future home buyers from mortgage companies.

The Foreclosure Crisis

Within the late 2006, the housing industry felt a large blow when a mass amount of foreclosures occurred due to rates on mortgages and also because of the fact that many of the new loans were made to individuals with either bad credit or too low of an income.

Experts believe that the basis for so many of these home loans being in place was the fact that many homeowners thought they could reap benefits when refinancing later on. Even though, their ideology failed because with the interest rates reset higher, refinancing was hard to come by which led to approximately a million foreclosures.

Mortgage lenders, banks and other financial institutions felt the impact dramatically reporting 100’s of billion dollars in losses. Not only was the housing industry devastated, but the US economy in a whole was also rocked by the housing crisis. These issues led to the US Federal Reserve cutting down interest rates and to the creation of the economic stimulus package which was passed by the government in 2008 to help offset debt and to spur on economic growth and instill belief in the US economy.

The Economic Stimulus Package

The Economic Stimulus Package of 2008 was passed in order to restore good faith within the economy. Its main purpose was to provide assistance to low and middle income citizens. From the economic stimulus package, all recipients were set to receive at least $300 and an extra $300 per dependent under the age of 17. The maximum pay that a person would receive would be no more that $600. Any individuals with an annual income over $75,000 would not receive any monetary funds except for those who had qualifying children.

In addition to citizens, the law also applied to businesses offered them certain tax incentives. Those include tax deductions on eqiupment meant to improve ones business and an increase in how much a business can deduct in business expenses.

In an article by James Temple from SF Gate he lists several key changes in mortgage practices that was just passed on Monday.

General Mortgage Rules:

- Prohibit creditors and mortgage brokers from coercing appraisers into misstating a home’s value.

- Require additional information about rates, monthly payments and other loan features in all advertising.

- Ban seven deceptive or misleading advertising practices, including calling a rate or payment “fixed” when it can change.

Lending Rules For Higher Priced Subprime Loans:

- Force lenders to consider a borrower’s ability to repay loans from income and assets other than the home’s value.

- Require lenders to document a borrower’s income and assets.

- Ban penalties for borrowers who pay off loans early, if the payment can change in the first four years. In certain cases, a prepayment penalty period can’t exceed two years.

- Mandate that creditors ensure certain borrowers set aside money to pay for property taxes and insurance, by establishing escrow accounts.

In reference to the new mortgage rules, many claim that these rules will assist many homeowners and aspiring homeowners from companies that prey on them to make a profit despite the views on their practices are questionable. Yet with this belief intact, many individuals still hold firm in their opinion that these rules are just a tip of the iceberg and much more needs to be done within the housing industry and in relation to some of the illegal practices carried on by some of the lending companies.