Does Mortgage Industry Still Have Double Standards & 'Kickbacks'?
As Congress considers mortgage reforms, America's Watchdog's National Mortgage Complaint Center are demanding that the U.S. Congress & the United States Department of Housing & Urban Development (HUD) require banks, mortgage bankers and home builders acting as mortgage lenders to disclose a little known mortgage kickback in the mortgage industry called a "yield spread premium". Mortgage brokers must disclose the yield spread premium kickback. Banks or mortgage bankers get the same kickback, but they have no federal disclosure requirement, they say.
While most U.S. consumers have never heard of a "yield spread premium," the vast majority of U.S. homeowners pay a higher monthly mortgage payment because of it, according to consumer advocates at America's Watchdog. The National Mortgage Complaint Center estimates that 9 out of 10 U.S. homeowners were either over-charged on a mortgage, or they received a much higher interest rate than was available. The National Mortgage Complaint Center is on record as calling the "yield spread premium the worst case of fraud in U.S. history."
So what has Congress done about this issue? According to the National Mortgage Complaint Center, " House Speaker Nancy Pelosi clearly does not understand the issue of mortgage transparency applying to banks, mortgage bankers, or home builders, when it comes to protecting homeowners, and full disclosure of the yield spread premium (kickback). Either she and her colleagues in the House & the Senate have been influenced by special interest groups, in order to continue giving banks and mortgage bankers a free pass on non disclosure, or they simply do not understand the current U.S. mortgage/real estate disaster."
According to the America's Watchdog's National Mortgage Complaint Center, real U.S. mortgage reform should include the following:
- All lenders to include, banks, mortgage bankers, home builders acting as mortgage lenders, and mortgage brokers must clearly disclose to the consumer all fees they receive in connection in originating a mortgage. This includes the yield spread premium kickback for inflating a borrowers interest rate/monthly mortgage payment.
- The Yield Spread Premium kickback must be disclosed on the HUD-1 Settlement Statement and on the Good Faith Estimate given to the borrower before closing; by banks, mortgage bankers, home builders acting as a lender and mortgage brokers. (only mortgage brokers are currently required to disclose this kickback----banks or mortgage bankers have no such obligation--even though they get the kickback too) (costing average homeowners thousands of dollars on each loan)
- At the mortgage closing, the lender (bank, mortgage banker, home builder, mortgage broker) should be required to give the borrower a simple form that says the following: "we have raised your interest rate above the best rates available in order to get a kickback called a yield spread premium by (Amount). As a result of inflating your interest rate you will pay (amount) more per month as part of your monthly mortgage payment."
On the third point, America's Watchdog and its National Mortgage Complaint Center are convinced if borrowers actually saw what the "yield spread premium" cost them, they would have never had agreed to do the mortgage in the first place. The group emphasizes, "it's time for this absolutely ridiculous mortgage double standard to go away". Of the approximately 74 million U.S. homeowners, how many got stuck with a inflated interest rate, or a higher monthly mortgage payment because of a poorly disclosed or not disclosed yield spread premium? According to the National Mortgage Complaint Center about 90%. How many U.S. consumers understand what a yield spread premium kickback is, or how it affects their monthly mortgage payment? According to the group, less than 5% of all U.S. homeowners.
Before an attorney working for HUD resigned, he told America's Watchdog, "in law school I was taught that bribing a cop was a crime. What banks do with members of the U.S. House and Senate is no different, when it comes to mortgage transparency for consumers."
How Can Consumers Protect Themselves?
Visit the Homeowners Consumer Center's Resource page and read the free mortgage guide. The free mortgage guide was created as a way to protect homeowners from being cheated on a mortgage.
Homeowners should stay away from "no point-no cost mortgages". According to the National Mortgage Complaint Center, "no point, no cost mortgages are a scam". The lender simply raises the interest rate, the consumer gets a much higher monthly mortgage payment, and the bank or mortgage banker makes thousands of dollars with no requirement to disclose what they made.
If a homeowner or consumer is about to get a mortgage or refinance on a home, they should have the mortgage inspected before closing by the National Mortgage Complaint Center in order to avoid being cheated or over charged.
The National Mortgage Complaint Center is saying, "2008 is the year the U.S. Congress needs to start acting like the peoples Congress as opposed to the Congress paid for by big business and special interest groups." 2008 will also be a year that millions of U.S. homeowners will lose their homes to foreclosure, because a bank, mortgage banker or a home builder sold them a bill of goods. According to the group; "the mortgage process needs to be transparent, and double standards in U.S. home lending need to go away. Millions & millions of Americans have been cheated or over charged by their mortgage lender. Its time for change."