Once again, the printouts heralding housing news that are heaped on my desk threaten to fall over and hurt me. In the name of safety, let’s get the news (much of it mortgage-related) to the people:
The ads touting reverse mortgages are hard to miss if you spend any time at all gazing at cable channels. Reverse mortgages are for homeowners 62 and older who have considerable home equity; the loans don’t need to be repaid until the borrower dies or sells the property.
Though reverse mortgages may be helpful in providing cash flow to some homeowners, the loans also have their detractors, who have cautioned potential borrowers about sometimes excessive fees and other perceived drawbacks. Now, regulators have tackled one commonly heard complaint: As of Aug. 4, the spouses of deceased reverse-mortgage borrowers who aren’t listed as co-borrowers will be allowed to stay in the homes, rather than being required to repay the loan immediately or face selling the house or even foreclosure.
The new rule allows heirs who hadn’t been listed as co-borrowers to be added to the reverse mortgage. The surviving spouses must continue paying taxes, insurance and fees, according to the Consumer Financial Protection Bureau. Under the terms of the new rule, loan repayment would be deferred till the death of the spouse.
A California-based mortgage lender has agreed to pay $48,000 to settle a federal complaint that it had violated fair-housing laws by denying or delaying loans to women because they were on maternity leave.
A married couple claimed that Greenlight Financial Services, now called GFS Capital Holdings, had denied their home refinancing loan application because the wife was on leave. The federal Department of Housing and Urban Development said the company also had acted similarly toward four other applicants who were on maternity leave or it had delayed their applications until after the women returned to work, according to a HUD announcement.
The federal Fair Housing Act prohibits discrimination on the basis of gender, including denying a loan because the applicant is pregnant or on family leave.
In further misbehaving-lender news, the feds also report that homeowners have received $3.1 billion in a settlement with 13 major banks over misconduct in processing mortgages that may have resulted in wrongful foreclosures, according to a Federal Reserve report.
It said that about 3.4 million mortgage borrowers covered by the January 2013 settlement had cashed checks as of April 25. The amounts paid range from several hundred dollars to $125,000.
Consumer advocates always have encouraged home buyers to comparison-shop for mortgages, but anecdotal evidence suggests that they don’t because, among other reasons, they’re intimidated by the process. Here’s another reminder that maybe they should try a little harder: There could be a fair amount of money at stake.
LendingTree, an online service that aims to match mortgage borrowers with lenders, recently tracked the differences between interest rates offered for the same loan and found an average difference of 0.365 percent.
The company came up with an average loan amount of $223,692 for prime borrowers of 30-year, fixed-rate loans and shopped around this typical borrower’s inquiry; it said the 0.365 percent difference could amount to $47.49 per month, or $17,269 over the life of the loan.
Americans are cleaning up their home equity loan act: The delinquency rate for these lines of credit has fallen to the lowest rate in five years.
The American Bankers Association reported that the delinquency rate fell to 1.57 percent in the first quarter, down from 1.91 percent a year earlier.
This article originally appeared on ChicagoTribune.com on July 20, 2014.