If you caught my CNBC segment the other day, I briefly mentioned the idea of eliminating a few steps in the process of getting a loan.
Since the federal government now controls most of the mortgage underwriting standards in the US anyway, let's try something new and less expensive for the consumer!
1. Combine Fannie, Freddie, FHA and VA into one agency. Make a set of underwriting guidelines that everyone can follow and be consistent.
2. Have the U S government guarantee every mortgage because of a small mortgage fee on every loan (like .25 of a point in fee, a la the NY mortgage tax). This way, if a loan goes into default, the balance of what is not covered by foreclosing is paid in by the fund.
3. Licenses, train, bond, background check and check up on loan originators. Then the licensees can originate a loan and have the government agency fund it directly. The Feds can then sell the loans off as new-age Mortgage Backed Securities to investors.
4. Currently, homes that go to foreclosure that are "rough" can only be bought, in cash, by investors. How about a program that gives people money to fix the home and a mortgage/inspection contingency so that homeowners can buy more homes!
5. Instead of the $7500 credit, how about a direct 5% down payment that is paid back over 15 years with 4% interest for the government. Then, if you default on the mortgage, your rate would go to 12% and it would come out of your tax refund.
This way, we can get people into homes with low down payments again, but with a real hammer if they don't pay!
6. We can offer a 100% program a la the way VA does it. Again, if you default, the top 5% would come from your tax refunds!
7. If a loan has to go to foreclosure, there will be a limit as to what a loan servicer gets (including legal fees) and when a loan goes more than 60 days, the servicing fee would be shut off unless certain guidelines are met.
We need the entire mortgage business restructured, streamlined and made more practical.
These items above get it going.
;)
;)
