Home Loan | Mortgage | Refinance

Archive for April, 2010

The Pueblo District Attorney has dismissed charges against another figure in the massive mortgage fraud case involving local restaurant owner Tony Ianne. Charges against Brianna Valle were dismissed last month after the district attorney’s …
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WASHINGTON — In December 2006, Goldman Sachs embarked on a frantic effort to shed billions of dollars in risky mortgage securities and purchase exotic insurance to protect itself against what it had concluded could be the collapse of America’s …
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The Justice Department has opened a criminal investigation of Goldman Sachs over mortgage securities deals it arranged. (April 30)
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U.S. Senator Carl Levin, chairman of the Permanent Subcommittee on Investigations, speaks at a news conference about tomorrow’s hearings about the role of investment banks in the financial crisis, featuring executives from Goldman Sachs Group Inc.
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Would it trouble you to know that when you apply for a home loan your personal information is being sold without your knowledge or consent? Personal information about you including your address, credit score, payment history, account balances, and credit limits.

Take the case of Mary S. from Highlands Ranch, Colorado. She bought her home three years ago using an adjustable rate mortgage (ARM). As the rate adjustment point approached she knew she had to refinance in order to avoid a significant payment increase. Mary called her local lender who had done a good job with her original purchase loan. Two days after applying with him a strange thing happened. Her phone started ringing – almost endlessly. One mortgage company after another called to offer her a ‘better deal’ than her local guy was offering. A few of the companies were in Colorado but several others were from out of state.

They all seemed to know quite a bit about Mary. They knew where she lived, who she owed money too, and even if she paid on time. Most amazingly, they also knew that she was presently refinancing her house — even though she had shared this fact with only one other person.

What was going on here? Where were these complete strangers getting her personal information? Did her loan professional sell her out?

It turns out, incredibly, the information was provided by the three major credit bureaus themselves. Not only did the credit bureaus supply the information to these third parties without her knowledge or consent — but they even profited from it.

Welcome to the world of ‘Trigger Leads’. They are the latest profit tool used by the three powerful credit reporting bureaus — Experian, Equifax, and Transunion.

Trigger leads work like this: When Mary applied for her refinance loan she authorized her local lender to pull her credit to determine her qualification status — a standard procedure. Once her credit was pulled her credit profile was ‘flagged’ by each bureau as a mortgage inquiry. Mary’s credit profile was then electronically added to a list of other consumers seeking home loans. This list was then packaged up by the credit bureaus and sold to numerous internet-based ‘lead brokers’ within 24-48 hours of Mary’s inquiry. The lead brokers in turn sold this data to various subscribing mortgage companies as ‘hot leads’.

All of this was done without Mary’s knowledge or consent. It is likely that Mary’s loan officer had no idea this was going on behind his back either. Little did he know his competitors were pestering ‘his’ client just hours after her application with him.

This marketing practice calls into question numerous privacy and ethical issues. The National Association of Mortgage Brokers is trying to get this type of marketing program banned. Roy DeLoach, executive vice president of the National Association of Mortgage Brokers, recently stated “It’s outrageous that simply applying for a home loan should open up a person’s sensitive personal information” to unknown, and perhaps unscrupulous third parties.

Until legislation is passed to deter this practice consumers can prevent their personal information from being sold by calling 1-888-567-8688 (1-888-5-OPTOUT) or going to http://www.optoutprescreen.com. The FCRA (Fair Credit Reporting Act) has mandated the availability of this opt-out program to consumers.

Bill Burniece is a consumer advocate and mortgage planner. His latest eBook is aimed at helping homeowners stop their foreclosure and avoid being ripped off. Preview his new eBook at: http://www.AvoidForeclosureMistakes.com

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Some homeowners may never re-finance while others may re-finance frequently. This is a decision which is largely a matter of personal preference. Sure there are some financial benefits which may result from re-financing but for some homeowners these benefits are not worth the hassle of going through a mortgage re-finance. For these homeowners the amount of savings overall or the opportunity to lower monthly payments is simply not worth the effort of investigating the re-financing options, comparison shopping for lenders and paying closing costs to obtain a re-finance.

Are Some Homeowners Just Lazy?

Yes, let’s face it we have all visited a friend’s house to find dust bunnies under the couch or unfolded laundry lying on the floor. However, laziness is usually not the culprit when a homeowner opts not to refinance despite the opportunity for an overall savings or lower monthly payments. In these cases the homeowner may simply decide not to re-finance because they are not confident in making the right decision. These homeowners essentially decide they are happy with their current financial situation and are not willing to make changes which may or may not improve this condition. It is likely that these same homeowners would re-finance their home if all the work was done for them and they were guaranteed an improved financial situation.

Do Some Homeowners Just Not Understand the Financial Benefits?

This may be true as well. Homeowners who do not fully comprehend the potential savings which may be involved in re-financing are not likely to undergo the re-financing process. For these homeowners it may seem as though the efforts are not worthwhile for the benefits that are received. If the homeowner had a clearer understanding of the situation they might have a different opinion but in this case the homeowners may be unable to comprehend the ramifications of a re-finance.

Consider the factors involved in re-financing. Most of the equations use to justify the benefits of re-financing are rather complex. There are calculators available online which make it extremely simple for homeowners to enter the known information and obtain the desired results. However, these calculators typically do not explain how the calculations are performed. This can make it hard for some homeowners to simply accept the results produced by these calculators. When this is the case the homeowner is not likely to be inclined to automatically accept the results generated by these calculators. Additionally, the homeowner may not consider re-financing until they are able to confirm these calculations. Depending on the homeowner’s mathematical skills, this could be either a short process or a long process.

Can You Convince a Homeowner to Re-Finance?

This is a hard question to answer because it depends on a number of factors. Some homeowners may be extremely trusting and may be convinced to re-finance with little effort at all. Conversely some homeowners may be quite guarded in terms of their financial situation. These homeowners may be suspicious of claims that the re-financing can improve their financial situation. These suspicions can make it extremely difficult for a homeowner to be convinced to make a change. Once suspicions begin to develop the homeowner may either seek out more information on the subject or become less receptive to additional information. While one case may lead to the homeowner being more likely to be convinced to re-finance the other case will likely make him less willing to re-finance.

What is home equity loan refinancing? Home equity loan refinancing is a loan that has the value of the difference between your property and the amount of all that you owe on your property, which is your home. To make things easier for you to understand, let us say that the appraised value of your property (again which is your home) is 200,000 dollars, and all the outstanding liens on it is has an accumulated sum of 50,000 dollars. The equity of your home would then be 50,000 dollars.
Most of homeowners acquire home equity loan refinancing to take the amount out in cash. The advantage of home equity loan refinancing is that you can do whatever you want with the money. Unlike other types of loan wherein you are restricted to a certain area, like for example a car loan, you can only use that loan exclusively for car purposes only. In home equity loan refinancing, you can use the cash to pay of your debts like bills. Most homeowners acquire a home equity loan refinancing to finance their child’s educational expenses, while some acquire home equity loan refinancing for emergency purposes like hospitalizations and medical reasons.
Home equity loan refinancing is a great alternative for homeowners, who want to borrow money with low interest rates, if their original mortgage is fixed or has swollen into a huge monthly payment. When considering for a home equity loan refinancing, always make sure that the refinance home equity loan package suits you.
There are many home equity loan refinancing companies found in the market nowadays. Most of the time, these home equity loan refinancing companies send solicitations for loans to homeowners almost everyday. These solicitations are either sent via electronic mail, snail mail or by the use of a telephone. When shopping for a home equity loan refinancing company, always make sure that you thoroughly understand the terms and agreements of the refinance home equity loan company.
But first you must appraise your home to know its current value on the market. You must do this before processing a refinance home equity loan. Some of the refinance home equity loan companies on the internet offer an estimate on the value of your home. But if you want to do it by yourself, you can check out the local listings of homes on your neighborhood or area that has the same size and condition of your home. Most of the time property sales are advertised on the newspaper.
And also be wary for refinance home equity loan scams. Always remember, you have the right to cancel your refinancing loan if the deal or package is dubious. Do not let the lenders intimidate you into signing something which you are not sure of. Do not hesitate to ask questions. And most importantly, don’t sign anything that has blank spaces or if you have not read it carefully first.