Monday, April 04, 2005

Legal Problems For Mortgage, RE Industry

Some real estate professionals got a little greedy during the housing bubble and it may be coming back to haunt them. "We are doing investigations in every state, we anticipate a very busy (enforcement) year." That's from Realty Times.

And Business Week tells us the Fed isn't happy with subprime lending practices. "When the broker is compensated on the price of the loan, he has an incentive to squeeze the highest interest rate he can get away with," says Ruhi Maker, a senior attorney at the Public Interest Law Office.

Ah, the lawyers. You knew they would be eager to get involved. "A "yield spread premium" is a term for a fee that is paid as a kick-back to mortgage brokers for increasing the borrowers interest rate over the best rate the consumer could have received at time of the closing of the home loan. While mortgage brokers must disclose these hidden fees, mortgage bankers and or banks have no such requirement."

"Less that 3% realized that the mortgage broker had received a yield spread premium/extra compensation on their mortgage transaction. According to nationwide interviews of appraisers, mortgage brokers and real estate agents, 15%+ of all real estate appraisals puff up or overstate the value of a home."


At 9:38 AM, Blogger John Law said...

wow, looks like the fraud is going to be found out before things go south, unlike the stock market

At 9:47 AM, Anonymous Anonymous said...

Ben: You might want to check this out.


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