Fed plans new rules to protect future homebuyers (part I)

WASHINGTON - The Federal Reserve, trying to stabilize a shaky U.S. financial system, may give squeezed Wall Street firms more time to tap the central bank's emergency loan program, chairman Ben Bernanke said Tuesday.

And, in an effort to prevent a repeat of the current mortgage mess, Bernanke said the Fed next week will issue new rules aimed at protecting future homebuyers from dubious lending practices.

The rules will crack down on a range of shady lending practices that has burned many of the nation's riskiest "subprime" borrowers — those with spotty credit or low incomes — who were hardest hit by the housing and credit debacles. The plan would apply to new loans made by thousands of lenders of all types, including banks and brokers.
It would restrict lenders from penalizing risky borrowers who pay loans off early, require lenders to make sure these borrowers set aside money to pay for taxes and insurance and bar lenders from making loans without proof of a borrower's income. It also would prohibit lenders from engaging in a pattern or practice of lending without considering a borrower's ability to repay a home loan from sources other than the home's value.

In an extraordinary action, the Fed in March agreed to let investment houses go to the Fed — on a temporary basis — for a quick, overnight source of cash. Those loan privileges, which are supposed to last through mid-September, are similar to those permanently afforded to commercial banks for years.

"We are currently monitoring developments in financial markets closely and considering several options, including extending the duration of our facilities for primary dealers beyond year-end should the current unusual and exigent circumstances continue to prevail in dealer funding markets," Bernanke said in prepared remarks to a mortgage-lending forum in Arlington, Va.

The Fed's decision to act — temporarily at least — as a lender of last resort for Wall Street firms was made after a run on Bear Stearns pushed the investment bank to the brink of bankruptcy and raised fears that others might be in jeopardy. It was the broadest use of the Fed's lending powers since the 1930s.

Few Mortgage Tips

1.With the sub-prime issues continuing to impact the real estate industry, it is refreshing to know that veterans can get 100% financing on a single family residence. The lending limit for a veteran to purchase in Utah is $417,000. This applies to duplexes, triplexes and fourplexes as well

2.Did you know that missing just ONE payment on that little credit card balance can cause your FICO score to drop 100 points in one month and could disqualify you for a loan, even if the minimum payment is only $5.00. Watch those little ones. . .paying only the minimum on time is more important than paying the whole balance off.

What Mortgage Programs are available now? (Part I)

1. There are still lender out there who lend their own money
2. 100% Financing is still available-with one loan and $500 contribution
3. 80/10/10 still available for Jumbo and Conventional
4. States Income/Stated Assest still available-10% down payment
5. Low FICO Lending still available (patience is required)
6. FHA/Utah Housing (currently 5.5%, in more details tomorrow)
7. Why Mortgage Insurance (MI) is good (in more details tomorrow)
8. no MI loans available up to 100% on conforming and 90% on Jumbo-I will try to show you that not only interest rate is important when you get estimates from broker
9. new Rehab loan for buyers
10. Interest Abatement