Obama says he will stop mortgage fraud from mortgage lenders and brokers.  He and Biden claims that under his watch, homebuyers get more information related to their mortgage loan options. He offers all this and a promise to provide additional tax credits to all middle-class homeowners.  How do you define “middle class” Mr. Obama?  $250,000 a year is the line they used on the campaign trail.  If stick to that – God Bless him! 

Seriously, please elaborate on your “mortgage credit” that is said to be a 10% home mortgage credit that enables homeowners to benefit if they choose not who do not itemize the mortgage interest with their tax returns.  They say on average that will yield $500 to 10 million homeowners.  One question Mr Obama…Wouldn’t the average homeowner get more back with present tax incentives already being practiced?  The answer is yes.  So is it a tax credit or increased tax on homeowners?

Obama’s website suggests that they have been examining the sub-prime mortgage lending issues for years.   This is good because it is imperative that the next president thoroughly understand the housing sector and mortgage financing.  Apparently, Obama introduced legislation to fight the war on mortgage fraud.   He vows to protect consumers against abusive mortgage lending practices. The STOP FRAUD Act offers a federal definition of mortgage loan fraud and increases the funding for federal and state law enforcement programs.  He vows to implement new criminal penalties for home financing professionals found guilty of fraud while requiring co-workers to report fraudulent activity.  Who can argue with this…People want to put a face with the housing crisis that has cost them the equity in their home and in some cases the home themselves. 

Obama says he will eliminate laws that prevent bankruptcy courts from introducing loan modifications. This is a good thing if banks are going to modify loans why not do it at this level as well.  Obama says he will introduce a HOME score which enables borrowers to compare several home loan products while better understanding the total cost of the mortgage.  This is what the Federal Truth and Lending Statement does.  It multiplies an average of the borrower’s monthly payment over the months they have the loan.  (ie.  3,000 a month over 360 months will cost you $1,080,000)   The truth in Lending Law is pretty darn clear.  We all should take some responsibility with this mortgage meltdown.  Whether you are a homeowner, loan officer, lender, bank or politician, we all played a role that led to this foreclosure epidemic.

Here is the problem Mr. President, the sub-prime meltdown and the foreclosure crisis problem is far more complicated than predatory lending from unscrupulous mortgage brokers.  Banks do not like mortgage brokers and for years they fueled the fire that mortgage brokers caused the sub-prime meltdown.  For the last decade, Banks have created mortgage guidelines that created a housing boom.  American homeowners prospered and what could go wrong.  Lending guidelines in 2005 and 2006 went too far in allowing no money down home loans for borrowers with little, no or bad credit.  The housing bubble bursted and jobs were lost.  The mortgage industry melted and banks tightened their guidelines to the point where average homeowners could not qualify top refinance into a fixed rate mortgage they could afford.  FHA home loans have started to require certain credit scores and lenders like to play appraiser and reduce their appraised value to the point where everyone has been wasting their time.  Home values plummeted and the foreclosure concerns became an epidemic.  Loan modifications have become the modern refinance loan and now when the Fed cuts interest rates, mortgage rates actually rise.  Welcome to my world Mr. President….I’m an unemployed mortgage broker who like to write about the truth. 

Article was written by Bryan Dornan who is the marketing director with Nationwide Marketing.