Fed plans mortgage payment disclosure rule

[Roland99]

Source: MarketWatch

The Federal Reserve on Monday issued a package of rules and proposals for mortgages, including a measure that would require lenders to disclose to borrowers how their mortgage payments can change over time.

...

Based on the measure, lenders would need to provide details to borrowers about what the maximum interest rate and payment they would need to make during the first five years of their adjustable-rate mortgage, as well as a "worst case" example showing what the maximum rate and payment they could be required to pay. Lenders also would need to explain to borrowers that they can't avoid hikes in payments by refinancing their loans, according to the provision.

In addition, the Fed also proposed new consumer protection regulations to improve the disclosures consumers receive for reverse mortgages and to make sure that consumers receive new disclosures when they agree with their lender to modify key terms of a closed-end mortgage.

...

The central bank also announced it has adopted final rules to ensure that borrowers receive a notice when their mortgage loan has been sold or transferred. The new disclosure requirement has been effective since May 2009, when the Fed published interim rules based on the Helping Families Save Their Homes Act.

Read more: http://www.marketwatch.com/story/fed-plans-mortgage-payment-disclosure-rule-2010-08-16

[Roland99]

1. But there's only so much that can be done to protect some people >>>>>>>

Boulder Creek family bought worthless second mortgage from Wells Fargo at foreclosure auction
http://www.santacruzsentinel.com/localnews/ci_15573894

The Strands saw a newspaper notice last fall about the home, which is a mile from theirs, slated for a foreclosure auction. The unpaid debt was listed as $97,604.

...

Roberta looked up the property records. She saw there were two mortgages, a first and a second, recorded on the same date with the same lender. She figured the lender was auctioning the first and that the second mortgage would be wiped out.

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He pointed out the plaintiffs admitted they knew Wells Fargo had two deeds of trust on the property and "decided on their own what interpretation to place on that information" without consulting Cal-Western.

He explained why Cal-Western's sale notices did not say whether the auction involved the first or second lien: It is not required.

[hugo_from_TN]

2. Holy Cow - what a screw up.

It's like showing up with $100K in Vegas when you've never played blackjack a day in your life. Unbelievable that people would be stupid enough to 'assume' the second lien was wiped out. Always remember that a deal that looks too good to be true probably is.