New Mortgage Forms - What You Need To Know

New mortgage disclosure rules went into effect that require lenders to provide home buyers two new forms that clearly detail their loan terms.

For more than 30 years, Federal law has required lenders to provide two different disclosure forms to consumers applying for a mortgage and two different forms at or shortly before closing on the loan.

Beginning October 3, 2015, these four forms were replaced by two new forms, a Loan Estimate and a Closing Disclosure.

Loan Estimate Form
Within three days of applying for a loan, lenders are required to provide you with a Loan Estimate. This form replaces the Good Faith Estimate and initial Truth-in-Lending disclosure.

Closing Disclosure Form
At least three business days before you close, you will also get a Closing Disclosure. It contains a summary of the final terms of your loan. This form replaces the HUD-1 Settlement Statement and final Truth-in-Lending disclosure forms for most mortgages.

More Information
For more information about the new disclosures and an interactive display of the new forms, visit the Consumer Financial Protection Bureau (CFPB) at http://www.consumerfinance.gov/knowbeforeyouowe

CFPB Releases Mortgage Shopping Toolkit

The Consumer Financial Protection Bureau (CFPB) earlier this week released a new toolkit designed to guide home buyers through the process of shopping for a mortgage.

 “Know Before You Owe” is a great resource for home buyers and was designed to help explain the complicated mortgage process in detail. Included in the toolkit is a detailed explanation of the new Loan Estimate and Closing Disclosure forms that lenders are required to begin providing in August.

The toolkit was designed to replace an existing booklet that creditors must provide to mortgage applicants.

Toolkit Features

• Interactive mortgage shopping worksheet
• Lender shopping checklists
• Information on how to handle problems
• Disclosure forms
• Rate Checker tool
• And more

Online Version

The toolkit can be viewed online at http://files.consumerfinance.gov/f/201503_cfpb_your-home-loan-toolkit-web.pdf

 

Order Hard Copies

Copies can be ordered from the GPO website:

 

Large: http://bookstore.gpo.gov/products/sku/048-013-00009-1

Small: http://bookstore.gpo.gov/products/sku/048-013-00010-4 .

Guide to Reverse Mortgages

The Consumer Financial Protection Bureau (CFPB) recently updated their guide to reverse mortgages.

More and more homeowners are considering tapping their home equity as they approach retirement age. Getting a reverse mortgage is one way that some older homeowners can do that.

Reverse mortgages are a special type of home equity loan sold to homeowners aged 62 years and older, which are repaid when the borrowers sell the home, move out, or die.

Reverse mortgages are a complicated type of loan that works best for homeowners who carefully consider all of their options.

Check out the guide to reverse mortgages (pdf) to learn more about them.

Questions to Ask Before Obtaining a Reverse Mortgage

A reverse mortgage is a type of loan that allows senior citizens to withdraw equity from their homes while living in that home. Payments are not expected to be made on that loan. Rather, the loan will be repaid in full when the borrower or borrowers no longer use the home as their primary residence and the home is sold.

Before obtaining a reverse mortgage ask yourself these questions:

1. What are the fees associated with this mortgage?
   Fees vary from lender to lender so it’s important to shop around and compare pricing. Most borrowers opt to add those fees into their closing costs and interest will be charged on those fees. In addition to interest and a servicing fee, expect to pay a reverse mortgage insurance premium.
2. Is this mortgage right for me right now?
   The younger you are when you take out the loan, the larger the balance will be over time. This means that as you age, you’ll have less home equity to tap in the event of an expensive emergency.
3. Can I lose my home if I have a reverse mortgage?
   Failure to pay your property taxes, insurance premiums, and maintain the home can all result in potentially losing the home if the loan is called due or the house is foreclosed upon.
4. Have I talked to HUD certified counselor?
   Talk to a housing counselor who’s been approved by the Department of Housing and Urban Development (HUD) and discuss your situation. Find a HUD counselor near you or call HUD’s housing counselor referral line (800) 569-4287.

While a reverse mortgage can be a useful retirement planning tool, they’re not always the answer for a senior borrower. Do your research and talk to a housing counselor who can help you with your decision.
 

More Information

 

FAQs About HUD’s Reverse Mortgages

Reverse Mortgage Information from the Consumer Financial Protection Bureau

Loan Modification Scams – How to Spot One

DFI recently filed actions against two companies for operating unlawful mortgage rescue or loan modification schemes.

See press release from DFI: http://dfi.wa.gov/consumers/news/2014/loan-modification-scams.htm

The scams tricked consumers into paying large upfront fees but did nothing to help them stay in their homes and avoid foreclosure.
 

The actions are part of a joint federal-state sweep by the Consumer Financial Protection Bureau, the Federal Trade Commission and 15 states targeting scam operations that prey on delinquent homeowners or those facing foreclosure.
 

Homeowners looking to modify their loan should keep their guard up and be able to recognize the warning signs of a loan modification scam.
 

Warning Signs of a Possible Loan Modification Scam

• Company is not licensed with the Washington State Department of Financial Institutions
• Company claims license is not required because attorneys are involved
• Out of state attorneys are not licensed to practice in Washington 
• Money is required upfront before any paperwork is reviewed or signed
• Company tells you NOT to contact your lender
• Company requires direct access to your bank account or credit card
• Claims that a modification is guaranteed

Federal law bans law firms from requesting or receiving payment from you for help obtaining foreclosure relief.

 

Resources

• Washington Homeownership Information & Counseling
  The Washington State Department of Financial Institutions encourages all homeowners who are facing foreclosure to call a certified home counselor for free help at 1.877.894.HOME (4663).
• Is it real legal help or a scam? (pdf)
  Information from the Consumer Financial Protection Bureau about spotting foreclosure rescue scams.

 

Washington Foreclosure Assistance Brochure Now Available in 11 Languages

Washington homeowners facing foreclosure can now access brochures about homeownership counseling and mediation services in 11 languages.

The Washington State Legislature established the Foreclosure Fairness Act and the Mediation Program in 2011. The program, overseen by the Department of Commerce, is designed to help homeowners and their lenders explore possible alternatives to foreclosure and reach a resolution when possible.

It assists Washington homeowners who are facing foreclosure by providing free homeownership counseling and information about possible mediation with their lender.

While thousands of homeowners have met with housing counselors free-of-charge, and hundreds have entered mediation with their lenders to avoid foreclosure, it is estimated that only 10 percent of homeowners facing foreclosure are using these resources.

The Washington State Department of Financial Institutions is charged with outreach and raising program awareness.

Program information brochures – in 11 different languages – are available online at the www.homeownership.wa.gov website. The toll-free hotline and website offer residents a direct link to federal- and state-approved counselors in their communities.

Housing counseling services are free to Washington residents, and are being funded by the state with money from lenders.

Printed versions of the Foreclosure Fairness Program brochures are also available to order online, free-of-charge. The brochure is available in the following languages:

• English
• Arabic
• Chinese
• Korean
• Russian
• Samoan
• Somali
• Spanish
• Tagalog
• Vietnamese
• Cambodian

View or Order Brochures 

How to Request a Loan Modification

Many homeowners struggling to make ends meet are turning to loan modification programs to help them save their homes. Modifications can be government sponsored modifications with prescribed terms and conditions or “in-house” modifications offered by the lender or investor who owns the loan.

The government sponsored modifications have specific program processes and certain eligibility requirements the homeowner must meet. An in-house modification may have more flexibility unless the investors are restrictive about the modifications the lender or servicer may offer.

Loan modifications can make a costly loan more affordable by lowering the required monthly payments through lowered interest rates or an extension of the loan’s term from thirty years to longer. The loan’s owner can also choose to make an outright reduction in the loan’s principal.

Typically, you request a loan modification by working with:

1. Your lender or servicer;
2. A certified housing counselor. Call 1 877 894 HOME to be connected to a counselor in Washington; or
3. A company licensed to provide loan modification services. Companies in Washington must be licensed by the Washington State Department of Financial Institutions.
   
   See: About Loan Modification Service Providers

How to Get Started

1. Gather and organize your financial documents
   (These will be useful throughout the process)
   • Contact information for your mortgage lender or servicer
     (This information can be found on the mortgage statement that arrives each month)
   • Proof of recent mortgage payments
   • Bank statements of previous 3 months
   • Pay stubs for last 90 days, 6 months if self-employed
   • Most recent tax return
   • Recent utility bills
   • Documentation of homeowner association dues, if applicable
   • A list of your income and monthly bills
2. Contact your lender or servicer
   Start by contacting either your lender or loan servicer. The servicer, if different from the lender, is the company that processes mortgage payments. Call the telephone number found on the mortgage statement that arrives each month. Be prepared to explain your situation and provide any documents required.
3. Contact a certified housing counselor
   If working with your lender does not yield the results you are looking for, contact a certified housing counselor. These counselors can work with you and help you determine if you’re eligible for a loan modification. Call 1 877 894 HOME to be connected to a counselor in Washington.
4. Learn more about the Washington Foreclosure Fairness Program
   The Washington State Foreclosure Fairness Program provides homeowner foreclosure assistance by offering free housing counseling, civil legal aid, education and outreach, and the opportunity for mediation. The program is administered by the state’s Department of Commerce.
   
   To learn more about the program, visit www.commerce.wa.gov/foreclosures
5. Learn about the Making Home Affordable Program
   The Making Home Affordable Program is a government sponsored modification program. The program has several different options to help homeowners get mortgage relief and avoid foreclosure.
   
   Visit www.makinghomeaffordable.gov to learn more and find out if you are eligible for this program. If you are not, you can still request an "in-house" modification from your servicer or lender.

Protecting Yourself from a Loan Modification Scam

The Washington State Department of Financial Institutions (DFI) has recently issued several consumer alerts regarding unlicensed companies advertising loan modification services to Washington residents.

Homeowners seeking a loan modification should always check the licensing status of companies with DFI before doing business with them.

Tips for Protecting Yourself from a Loan Modification Scam

• Work Only with Licensed Individuals and Companies
  Make sure you’re dealing with a licensed individual. Companies and individuals must be licensed under Washington’s Mortgage Broker Practices Act, or Consumer Loan Act, before offering to modifying your loan, or taking money from you. Verify a license with DFI at www.dfi.wa.gov or by calling 1.877.RING DFI (746-4334).
  
  Some companies claim they do not need to be licensed in Washington because they are licensed in another state. This is not true.
• Work Only with Licensed Attorneys
  Some companies also claim they don’t need a license because there is an attorney involved in the process. That alone is not an exemption from licensing. Attorneys from other states must be licensed to practice law in Washington if they are providing you with legal advice. Verify their law license with the Washington State Bar Association at www.wsba.org.  
• Read and Understand All Documents
  Be sure to carefully read and understand any documents you are asked to sign. Do not sign anything you do not understand.
• Refuse to Allow Direct Access to Checking Accounts or Credit Cards
  Protect your money and refuse to allow direct access to your accounts.
• Consider Your Options
  You can contact your lender yourself to seek a loan modification.
  
  Also, consider taking advantage of free homeownership counseling to see if you qualify for other types of mortgage assistance. Visit www.homeownership.wa.gov for more information.

National Mortgage Settlement Checks In the Mail This Month

Washington borrowers who submitted a valid foreclosure payment claim through the National Mortgage Settlement should be receiving a check this month for approximately $1,480, much higher than the amount of $840 first announced.

The settlement administrator, Rust Consulting, will mail valid claim payments from June 10 through June 17.

Every borrower who filed a claim will receive a letter regarding their outcome.  Borrowers with questions about their National Mortgage Settlement payment should call settlement administrator Rust Consulting at 1-866-430-8358.

About the Settlement

These checks come from a $1.5 billion payment pool negotiated by Attorneys General across the United States and set aside as part of the National Mortgage Settlement. Payment does not limit a borrower from seeking relief through a separate lawsuit or other claims.

In February 2012, 49 state attorneys general and the federal government announced the historic joint state-federal National Mortgage Settlement with the country’s five largest mortgage servicers.  Preliminary data shows that, so far, the servicers have provided more than $50 billion in direct settlement relief to borrowers nationwide.

Freddie Mac Announces Immediate Availability of Streamlined Modification for Delinquent Borrowers

Freddie Mac today announced it is making its new Streamlined Modification program immediately available to all eligible borrowers nationwide in order to expedite financial relief for potentially thousands of distressed families.

Freddie Mac's Streamlined Modification program had originally been scheduled to start on July 1, 2013.

Under the Streamlined Modification program, servicers are required to send modification offers to borrowers who are at least 90 days, but no more than 720 days, delinquent on mortgages that are at least 12 months old and meet other eligibility criteria.
The modification becomes permanent after the borrower demonstrates their ability to pay making on-time payments during the three month trial period.

The Streamlined Modification offers the same mortgage terms as Freddie Mac's Standard Modification which enables servicers to reduce monthly mortgage payments by adjusting interest rates, extending payment terms to 40 years, and, in certain cases, provide principal forbearance.

Freddie Mac’s Streamlined Modification Program

Beware of Companies Asking You to Pay for Government Mortgage Assistance

If you’re contacted by a company or individual who claims that, for a fee, they can help you receive government-sponsored homeownership relief – beware!

The fact is you don’t have to pay anything to get the benefits of these programs. 

To receive assistance from the nationwide mortgage servicing settlement, Independent Foreclosure Review Program, or the Making Home Affordable Program, you just need to qualify.

Protecting Yourself from a Loan Modification Scam

Today, DFI announced that we have filed 40 Statements of Charges against businesses preying on Washington homeowners facing foreclosure.

None of the companies or individuals charged with offering these so-called mortgage rescue services are licensed with DFI, a requirement that provides essential consumer protections. In addition, none of the attorneys charged are licensed with the Washington State Bar Association (WSBA) to practice law in the state.

Free First Time Homebuyer Seminars in Washington

Looking to take advantage of low mortgage rates and buy your first home? Then, be sure to check out the free first time homebuyer classes offered by the Washington State Housing Finance Commission.

Commission-Sponsored Seminars

• Are free and open to the public, include information about the Commission's Home Advantage first mortgage program, downpayment assistance, and other loan programs; and
• Are accepted by all affordable housing loan programs as meeting or exceeding educational requirements.

Inside A Loan Modification Scam: How One Works

At the request of the Federal Trade Commission, a U.S. district court recently halted a nationwide loan modification scam operating from the Dominican Republic – but pretending to be in Chicago.

How the Scam Worked

The scammers peddled mortgage assistance relief to financial distressed Spanish-speaking homeowners in the United States. The individuals operating the scam promised to dramatically lower homeowners’ monthly mortgage payments in exchange for a hefty upfront fee.

Forensic Mortgage Audit Scams: What You Need to Know

Fraudulent foreclosure “rescue” professionals use half-truths and outright lies to sell services that promise relief to homeowners in distress. 

According to the Federal Trade Commission (FTC), the nation’s consumer protection agency, the latest foreclosure rescue scam to exploit financially strapped homeowners are forensic mortgage loan audits.

In exchange for an upfront fee of several hundred dollars, so-called forensic loan auditors, mortgage loan auditors, or foreclosure prevention auditors backed by forensic attorneys offer to review your mortgage loan documents to determine whether your lender complied with state and federal mortgage lending laws. The “auditors” say you can use the audit report to avoid foreclosure, accelerate the loan modification process, reduce your loan principal, or even cancel your loan.

Guide to Reverse Mortgages

The Consumer Financial Protection Bureau (CFPB) today released a guide to reverse mortgages with information about their pros and cons.

Reverse mortgages, also called Home Equity Conversion Mortgages (HECMs), are a special type of home loan that allows older homeowners to access the equity they have built up in their homes now, and defer payment of the loan until they pass away, sell, or move out of the home.

Help for military homeowners (Holy Petraeus blog)

This was originally posted on the Consumer Financial Protection Bureau's blog

When I was at Fort Drum, NY last week I heard from a military spouse who said her family has been separated for four years – partly because of deployments but also because they can’t sell their house. At the same meeting an officer told me that he is underwater on a home he bought at a previous assignment. He wondered if there were any options for him that wouldn’t ruin his credit or require a large sum of money he didn’t have.

I’ve had conversations like these repeatedly in my travels to military communities across the country during the past year. The housing crisis has had a devastating impact on military homeowners, and their unique challenges have made it difficult for them to get help. So I’m glad to see that important protections for military homeowners were included in the recent settlement between the Federal government, 49 state Attorneys General, and five of the largest mortgage loan servicers: Bank of America, JP Morgan Chase, Citigroup, Wells Fargo, and Ally Financial.

Thinking of Refinancing? Tips on How to Start and What to Ask

Low interest rates may have many Washington homeowners considering refinancing.

But before you start the refinancing process, you’ll need to get organized. Here are some tips from the Washington State Department of Financial Institutions. Each lender’s criteria may be a little different.

• Gather and organize paperwork, such as such as pay stubs (covering one to two months), W-2 forms (two years), tax returns (two years), bank and investment statements (most recent), proof of current homeowner’s policy, and copy of latest tax assessment.
• Check your credit report and dispute any errors right away. Bring your credit report to your lender or broker. You can obtain a free credit report online at http://www.annualcreditreport.com/. Write and file with the credit bureaus any letters of explanation applicable to your circumstances if appropriate (you are the victim of identity theft or an illness or other one time catastrophe caused your delinquency).

Why It Is Important to Check Licenses of Loan Modification Service Providers

Today DFI issued an alert regarding Lenroc Services not being properly licensed to provide loan modification services in Washington. See alert at: http://dfi.wa.gov/consumers/alerts/lenroc-services.htm.

DFI received a complaint from a Washington consumer relating to a transaction entered into with a business claiming to be a mortgage broker, Lenroc Services, and an individual claiming to be a loan originator, Cornell Wallace. The consumer alleged that he paid this business and this individual to modify the loan on his mortgage. The loan modification service was not provided, the fee was not refunded, and the consumer’s inquiries were ignored.

In addition, Lenroc Services and Cornell Wallace are not licensed by DFI.

SBA Launches Temporary Program for Commercial Real Estate Refinancing

Here is some great news for small businesses facing maturity of commercial mortgages or balloon payments.

Small businesses facing maturity of commercial mortgages or balloon payments before Dec. 31, 2012, may be able to refinance their mortgage debt with a 504 loan from the U.S. Small Business Administration under a new, temporary program announced today.

The new refinancing loan is structured like SBA’s traditional 504, with borrowers committing at least 10 percent equity and working with third-party lending institutions and SBA-approved Certified Development Companies in the standard 50 percent/40 percent split. A key feature of the new program is that it does not require an expansion of the business in order to qualify.

SBA will begin accepting refinancing applications on Feb. 28. The program, authorized under the Small Business Jobs Act, will be in effect through Sept. 27, 2012.

For more information visit the SBA’s announcement at: http://www.sba.gov/content/sba-launches-temporary-program-commercial-real-estate-refinancing.