So.....here at the San Diego Real Estate Cafe we almost thought this news was comical. I mean, REALLY?! WHY are these issues still at hand? Haven't we seen what happens when you play with people's money - they walk from their house. So, if we could stop doing that, it would be good.
What do you think?
Anyways, here is the news on this.
The ban takes effect in April. The Fed said that its consumer tests found that borrowers generally were unaware of the payments and how they could affect the total cost of a loan.
Critics called the bonuses little more than kickbacks that encouraged mortgage brokers and lenders salespeople to steer borrowers into costlier loans.
Ok, seriously guys...stop being scumbags! It is so hard to clean up this housing market it is unbelievable.
So the mortgage guys have argued that they can used the payments (referred to as rebates or yield spread premiums) to cover your closing costs that way a homeowner wanting to refinance a mortgage with no upfronts costs might accept a higher interest rate to accomplish that.
I'd just like it if that was crystal clear from the get-go.
Finally, the Fed said that a loan originator "may not receive compensation that is based on the interest rate or other loan terms. This will prevent loan originators from increaing their own compensation by raising the consumers' loan costs."
Bottom line, too much goes on behind the scenes that affects the general public. And that "too much" then turns around and hurts our economy, our family, and our friends. Let's hope that it stops