Home valuation conduct codes are rules that Fannie Mae and Freddie Mac are expected to put into effect in 2009. They will bring marked changes in real estate lending. Here’s what these changes may mean to a home buyer or home owner.
The Good:
No one who stands to gain financially from a real estate transaction — including loan officers, mortgage brokers, or Realtors — will be allowed to order an appraisal to get property financed or refinanced. Only the actual lender can order it, and those involved in the loan production area will be precluded from ordering an appraisal or communicating with the appraiser in any way. This effectively eliminates the chance of anyone having influence over an appraiser. No one involved gets to have any choice in who is hired to appraise the property. No one gets to communicate a desired valuation to the appraiser.
Credit card companies have pretty much had a license to print money for a long time. And while associations like Consumers’ Union, publisher of Consumer Reports, have long spoken out against some of the industry’s most questionable practices, nothing has changed much in at least ten years.
Enter the election year and the soft economy. Finally the lawmakers are feeling the heat — and if they have to toss credit card companies into the fryer to keep themselves out they will do it! Naturally, banks and credit companies are gearing up to fight hard. Lobbyists are already spinning out claims that regulation will cost consumers more and make less credit available. It’s pretty funny, actually. The ABA claims that credit card issuers are better-regulated and more consumer friendly than mortgage lenders and so don’t deserve to have the spotlight turned on them. “Credit cards are a highly regulated industry,” Ken Clayton, counsel for the ABA said. “The parallel doesn’t work.”
The Federal Reserve’s rate cut to 2% shouldn’t inspire more than a yawn in financial circles, although many citizens believe that a cut by “the Fed” immediately translates to a drop in mortgage rates. Unfortunately not true, folks. The Federal Reserve is simply using its power in the financial marketplace to release more money into the system and influence banks to drop the interest rate they charge to lend each other funds overnight. While this short-term fix does have the effect of lowering the prime rate (which may influence rates on credit cards, some adjustable rate mortgages, and other lines of credit), the effect on most long-term mortgage rates is often the opposite.
Bankers and brokers have been throwing the same arguments around for years. Brokers claim to be better because they have access to programs offered by many different lenders and can therefore find the best program for you. Bankers claim they have more control of the loan approval and funding process and can offer lower rates. Both arguments are true to some extent. However, it really depends on the size and reputation of the institution involved.
Brokers According to Bankers: For example, bankers like to characterize brokers as fly-by-night opportunists who don’t care about their conduct — by the time the borrower realizes that he’s been taken advantage of, the broker has left the business and begun a new career selling cars or Amway.
Bankers According to Brokers: Brokers prefer to portray banks as moss-covered behemoths that only offer two programs and charge outrageous fees.
Tax rebate checks and reduced rates to prevent further recession, how do you, as an individual, prepare for an economic recession? Here’s some advice on preparing yourself and your family for economic recession, even if it is a minor recession.
Most importantly, come up with a budget and stick to it. By doing this, you can find places to cut discretionary spending. When you get your tax rebate check, use it to pay down credit card debt or store it away and start saving young.
Past studies of stimulus packages have been shown to boost the economy within two weeks as 80% of the stimulus money re-enters the economy. So don’t fret on the current recession, just remember in order for the market to gain, it has to take a setback and watch this video for more tips.
