Category Archives: Mortgage Information

US Pursues One of the Biggest Mortgage Fraud Cases Since the Crisis

Owners of an apartment complex near Pittsburgh, who wanted to take out a mortgage on the buildings, allegedly made vacant units look occupied by turning on radios, placing shoes and mats outside doors and in one instance having a woman tell inspectors her boyfriend was asleep inside.

The owners obtained a $45.8 million loan, which was wrapped into mortgage securities and sold to investors.

Practices such as these—which were alleged in a federal search-warrant application—have sparked one of the largest mortgage-fraud investigations since the financial crisis. It focuses on whether income from commercial properties was falsified, a move that would enable owners to get larger mortgages and take out cash or expand their businesses faster.

Still in its early stages, the investigation has so far yielded a fraud-conspiracy indictment against four real-estate executives in upstate New York. Loans that some or all of them were involved with totaled about $170 million, the indictment alleges.

Investigators have sought mortgage data on dozens of other apartment buildings, according to documents reviewed by The Wall Street Journal and interviews with people familiar with the probe. Investigators have looked at student housing and self-storage facilities in addition to apartment complexes.

About $1.5 billion of securities issued by Fannie Mae and Freddie Mac are backed by mortgages from just one developer who has been under scrutiny, according to a Journal analysis of loan data from Thomson Reuters .

Read more at: https://www.wsj.com/articles/u-s-pursues-one-of-the-biggest-mortgage-fraud-probes-since-the-financial-crisis-1534357872

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Homeowners not tapping into rising home equity

Homeowners are sitting on a record amount of equity, but this time they’re stubbornly reluctant to borrow against it.

Strong home price appreciation has handed Americans more than $5.8 trillion of equity they could be tapping and aren’t, more than double the level in 2011, according to data provider Black Knight Inc. At least part of that reluctance stems from rising rates, which means debt carrying adjustable rates will keep growing more expensive.

Last decade’s mortgage crisis has likely made consumers hesitant, too. Home prices fell 35 percent after the bubble burst, leaving many borrowers owing more than their house was worth. People who tapped their equity to pay off their credit cards ended up struggling to meet their obligations, said Dan Alpert, managing partner at Westwood Capital, a New York-based investment bank focusing on real estate.

“There’s a long-memory issue,” Alpert said. “People got caught with home equity lines last time.”

The banking industry is now encouraging homeowners to take a little more risk. Lenders jacked up the number of direct-mail solicitations for home equity products by 30 percent in the first quarter compared to a year earlier, according to market research firm Mintel.

The offers are landing in the mailboxes of potential customers like Andy Dogan, 42, who considered taking out a home equity line to increase his stake in the architecture firm where he’s a partner and make home improvements. He ultimately passed when the bank offered him a line for about $20,000 less than the mailer said he could be eligible for.

read more at: https://www.bloomberg.com/news/articles/2018-07-12/homeowners-have-more-equity-than-ever-but-don-t-want-to-tap-it

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Dodd-Frank reform could make it easier to get a mortgage

It should be easier for you to get a mortgage if President Donald Trump signs legislation that will lift lending restrictions on community banks.

Congress on Tuesday voted in favor of rolling back Dodd-Frank banking rules. The reforms would ease some of the mortgage laws from the Dodd-Frank Act of 2010, a massive financial law enacted in response to the financial crisis.

The new changes will allow community banks and credit unions to offer mortgages outside the typical Qualified Mortgage rule so long as they don’t sell that mortgage but keep it in-house. By holding that mortgage on the books, it would be deemed a Qualified Mortgage. The carve-out would apply to institutions with less than $10 billion in assets.

Many lenders think this change would allow more community lenders to offer mortgages. It would also be helpful for homebuyers, when mortgage rates are rising but still low.

It’s unclear how much of an impact a change to the mortgage laws would have on the housing market. A large portion of homebuyers already meet the requirements within the Qualified Mortgage rule. The Urban Institute says the Qualified Mortgage rule has had “little impact” on credit availability, though there are fewer mortgages being offered for under $100,000.

read more at: https://www.bankrate.com/mortgages/dodd-frank-reform-easier-to-get-mortgage/

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