วันเสาร์ที่ 21 พฤศจิกายน พ.ศ. 2552
Benchmark Lending - Average Price : $40
Benchmark lending was something I had never heard of. I did some research, and found it has to do with interest rates and banking, which seems to be a popular theme among high paying keywords. The benchmark rate is set by the Federal Reserve in the United States, and it is the interest rate the banks pay when they borrow money. That's right, your bank borrows money, too! They must have a certain amount of money on reserve, and when they don't they borrow money over a very short term (such as one night). So why is this term so valuable? Banks and mortgage companies seek out people who might need a loan. Banking makes it's money on loans, it's just a valuable business to be a part of when there are lots of customers. This price seems almost reasonable compared to many of the other keywords.
Personal Loans Interest Rates and More
SBI loans offer affordable interest rates The State Bank of India (SBI) has been in the business for a long time now. In February this year, it came up with a bumper offer for car loan seekers. SBI loan interest rate was slashed from 11.5 per cent to 10 per cent and lenders were also freed from paying the car loan processing fee for an entire year. Personal loan interest rates at SBI are highly versatile. They let the borrower choose between a fixed interest rate and a floating one. In the former case, the interest rate on the loan remains fixed throughout the tenure. But in the case of a floating rate loan, the interest rate need not remain constant. It could decline or rise, depending upon the changes that the Bank's Medium Term Lending Rate (SBMTLR) goes through.A striking feature of SBI that makes it stand out among several others is the fact that the interest is levied based on the daily/monthly reducing balance. While others use the annual reducing balance method, SBI offers an advantage to the customer. He does not have to pay interest on the amounts he keeps repaying. The interest is computed only on the loan amount that is presently outstanding. Since, this figure goes down with every EMI, the effective rate of interest is considerably reduced.Getting the ICICI AdvantageICICI Bank is one of the top most approached banks, easily India's second largest lender. ICICI bank loan interest rates have also been significantly lowered keeping in mind the need of the hour. A 50 basis point reduction in the benchmark lending rates is evident from the fall to 15.75 per cent. The floating reference rate, which applies to floating rate retail loans, has dropped to 12.75 per cent. Though the bank owes the reduction to a decrease in the cost of funds, the borrower's convenience has enhanced manifold.Loans are now available from ICICI bank at an increased comfort level. This includes personal loans of all types, including for home, car, education or any other. There are also plans that offer a fixed rate of interest for a period of the loan tenure and then switch to the floating rate. Similarly, ICICI bank loan interest rates for cars are not ruled by a uniform, absurd guideline. They vary according to the car model and the tenure of the loan, which is also dependent on the customer and his location.Sky rocketing interest rates are no longer the obstacle they used to be. There are people who shy away from a loan even when they have the urgent requirement of one, only because they fear the impossible rate of interest. Gone are the days when wicked money lenders in villages would amass land and wealth by trickery and exorbitance. With reliable and helpful banks like ICICI, SBI and many more, getting a personal loan at a reasonable rate of interest is simple for one and all.
Why Freedom Loan From Benchmark Lending is the Most Popular
When you think of mortgages that enable thousands of people to acquire homes every year, you are thinking of the Benchmark Lending group which has provided much needed finances to get new homes or refinance the existing homes to many families for over ten years. They offer tailor made mortgages to suit the needs of customers ensuring that you can afford it. They make this happen by considering the cash flow of every customer. They also consider the repayment period, investment opportunities and your equity plans. The Benchmark lending group was founded by Barney Aldridge in 1995 as a primary mortgage lending bank and it continues to grow. Customers can expect no hassles and there are no middlemen. The headquarters are located in Northern California and their culture is to provide a good service with dedication and passion.When you need to apply for a loan, the company assures you that the process is easy and, you do not have to worry about complications. You will have a loan officer guide you through the whole process briefing you on all vital issues on credit until you have a satisfactory end. At Benchmark lending group, the management consists of people who have mastered the industry and proved that they can deliver what it takes to progress the business. It consists of the President who is the Chief Executive officer. His name is Jason Ehrlicher and he began as a loan officer in the company and years have seen him become capable and able to lead owing to his rich experience and dedication to the company since it began.The others in the management team include the Director of Human Resources, Vice President of Sales and the Sales Manager. The first kind of loan they offer is the Fixed Rate Loan where the rate does not change and one can get a loan to repay in 10, 15, 20 and 30 years. People who go for such a loan must be planning to keep their house for more than 10 years and, for those who do not plan to use their home equity for the period of the loan. The other kind of mortgage the Benchmark Lending group offer is the adjustable rate mortgage. This loan is for people who plan to keep their house for up to 10 years or less. The duration for this kind of mortgage is usually 3, 5, 7 and 10 years.A freedom loan from Benchmark Lending is the most popular because it is an adjustable loan that enables you to choose from 4 different payment methods according to your convenience every month. The loan is tailor made for people who do not have a regular or stable cash flow and for people who want to make other investments. Another loan suitable for people with fluctuating incomes is the Better Half loan and, it will help people with unstable monthly income realize their dream of owning a home. There are very many other options to choose from and, you can even apply online on their site. There are other resources that you will find very helpful. Before you take any mortgage, it is good to consider your income and your flexibility and ability to repay given the many options of repayments. Get a good system that will help you realize your dream for a good home.
Making a Profit on Investment From Social Lending Sites
The worldwide lending industry is a multi-billion dollar industry where people borrow from banks, financial institutions and other private lenders. In the last couple of years, the lending industry has gone through an evolution and has given way to social lending as the new and promising mode of lending. Also known as peer- to- peer lending or person to person (P2P) lending, one of the first companies to set the base for social lending are Zopa, Prosper and more recently LendingClub.Zopa is considered the first social lending marketplace in the world and its roots are in the United Kingdom. With the launch and immediate success of Zopa, other similar peer to peer lenders have sprung up like Prosper in the US, Boober in Netherlands and Smava in Germany.If you are wondering whether the P2P loans offered at the social lending sites are worth it or not then the answer is most likely yes. There is not much of a difference as far as the P2P loans from these lending hubs and from a bank is concerned. The difference lies in the fact that there are no banks, no long procedures, and no middleman and above all the entire process is transparent for both the lenders and borrowers (no more hidden hard to find loan agreements!).The main objective of the social lending hubs is to offer an online loan with the best interest rates and to make customers feel like they are borrowing from a friend or community. This peer to peer borrowing is increasingly being seen in a new light and is being considered as a part of community borrowing (which was more traditionally offered by small local community banks).Other benefits:1.class, which they can add to their portfolio because it doesn’t fall under an investment or even a savings account.2.Choosing interest rates and loan repayment: There are several benefits for lenders as well as borrowers. In social lending hubs like Zopa or Prosper, lenders have the freedom and the flexibility to choose a loan repayment time period as well as the interest rate on the p2p loan.3.Active community participation: one of the salient points is that this kind of a lending hub make borrowers feel as if they are following from an actual person and not an organization or a faceless institution. Hence it helps in developing a strong community feeling.Lenders at any of the social lending websites have the power to set a minimum interest rate that they want to earn and can bid in an increment of $50 till $25,000 through loan listings. Borrowers can create a loan listing for a period of 3-years, and borrow an amortized and unsecured loan of up to $25,000 and also provide the maximum interest rate that they will be able to pay a lender.The success of Zopa lies in its facts and figures. They are the largest lender today and have loaned out in excess of $930,000. The return on investment for lenders has been around 5.01%, which is healthy especially in the wake of the fact that social lending is still in its nascent stages. One of the top lenders even got an ROI of 19.8% on social lending websites.The LendersBy now you are probably thinking who these lenders really are? Are they banks in disguise or are they really other people? The truth is that they are really people. Let’s take Zopa and Prosper for example. Both the social lending hubs are backed by Benchmark Capital who also funded eBay. Zopa or Prosper are the best alternatives that anyone can have to banks or other financial lending institutions, however they are restricted to the UK and US markets.The current business model of Zopa is based on a 1% exchange fee that borrowers are paying them upfront. In return, Zopa is offering borrowers a better interest rate by cutting out the bank middleman. More than that, a borrower will have more control of the entire lending process and has the flexibility to establish an interest rate.Zopa is the acronym for Zone of Possible Agreement, and its lenders include only U.K. residents who are over 18 years of age. To qualify as a lender, a person needs to have a valid bank account and a high personal Equifax credit rating. There are two restrictions for becoming a lender and they are:•Lenders have to be individuals and not businesses.•Lenders will not be allowed to have anything in excess of £25,000 ($47,000) in outstanding loans at a given point in time.The American counterpart of Zopa is Prosper and they also handle maximum loan of $25,000 at a time. At this point the future of social lending looks bright as it has now hit New Zealand and Australia with the first peer to peer lending hub in Australia to launch shortly being Lending Hub (you can see their site at lendinghub.com.au and their active blog at blog.lendinghub.com.au) which will offer P2P loans with a strong community focus to ensure a truly social experience for both borrowers and lenders rather than just being a transactional online loan tool.
Ecb Strikes Hawkish Tone on Interest Rates as U.s. Fed Plans Further Cuts
While the U.S. Federal Reserve is expected to cut its benchmark Federal Funds target rate to a record-low 0.5% at its policymaking Federal Open Market Committee meeting tomorrow (Tuesday), the European Central Bank (ECB) is signaling a reluctance to drop its key rate below 2.0%.
Since the Euro-region slipped into a recession in October, the ECB has cut its main interest rate by 175 basis points to 2.5%. However, the bank’s policymakers, led by ECB President Jean-Claude Trichet, are now sounding calls for more fiscal discipline.
Investors are betting that the ECB will be forced to shave another 50 basis points off its benchmark rate in January, but ECB council member Axel Weber warned last week that the bank “would like to avoid” taking it below that level.
“We should be cautious when our rates approach territory we haven’t explored before,” Weber told Bloomberg News. “Our lowest level so far was 2.0%.”
ECB President Trichet told The Financial Times today (Monday) that there was “a degree of excessive pessimism” when the bursting of the dot-com bubble drove central banks to slash benchmark borrowing costs. Many analysts believe those excessively low lending rates fueled the asset bubbles of the past decade, including the massive run-up in real estate prices whose subsequent collapse helped trigger the current global downturn.
Trichet added that policymakers had a duty “to eliminate as completely as possible all the inbuilt elements in global finance that are amplifying booms and busts.”
ECB Executive Board member Juergen Stark said Dec. 10 that any room left for further rate reductions is “very limited, potentially allowing for small steps only.”
Of course, there are some analysts who believe the recent rhetoric coming from the ECB is just that.
“They will be forced to go to 1.0% or lower by June,” Juergen Michels, chief Euro-region economist at Citigroup Inc. (C) in London told Bloomberg. “The rhetoric at the moment is to justify their forecasts, which are too optimistic.”
The ECB forecasts the greater European economy will contract by 0.5% in 2009, before expanding by about 1.0% in 2010.
If the ECB’s estimates are too generous, the European central bank could again be forced to backtrack on its policy mandates. The ECB actually raised its benchmark rate to 4.25% in July, with policymakers expressing concern that “price and wage-setting behavior could add to inflationary pressures.”
The bank reversed course just four months later in October, cutting its rate by half a point on Oct. 8.
Since the Euro-region slipped into a recession in October, the ECB has cut its main interest rate by 175 basis points to 2.5%. However, the bank’s policymakers, led by ECB President Jean-Claude Trichet, are now sounding calls for more fiscal discipline.
Investors are betting that the ECB will be forced to shave another 50 basis points off its benchmark rate in January, but ECB council member Axel Weber warned last week that the bank “would like to avoid” taking it below that level.
“We should be cautious when our rates approach territory we haven’t explored before,” Weber told Bloomberg News. “Our lowest level so far was 2.0%.”
ECB President Trichet told The Financial Times today (Monday) that there was “a degree of excessive pessimism” when the bursting of the dot-com bubble drove central banks to slash benchmark borrowing costs. Many analysts believe those excessively low lending rates fueled the asset bubbles of the past decade, including the massive run-up in real estate prices whose subsequent collapse helped trigger the current global downturn.
Trichet added that policymakers had a duty “to eliminate as completely as possible all the inbuilt elements in global finance that are amplifying booms and busts.”
ECB Executive Board member Juergen Stark said Dec. 10 that any room left for further rate reductions is “very limited, potentially allowing for small steps only.”
Of course, there are some analysts who believe the recent rhetoric coming from the ECB is just that.
“They will be forced to go to 1.0% or lower by June,” Juergen Michels, chief Euro-region economist at Citigroup Inc. (C) in London told Bloomberg. “The rhetoric at the moment is to justify their forecasts, which are too optimistic.”
The ECB forecasts the greater European economy will contract by 0.5% in 2009, before expanding by about 1.0% in 2010.
If the ECB’s estimates are too generous, the European central bank could again be forced to backtrack on its policy mandates. The ECB actually raised its benchmark rate to 4.25% in July, with policymakers expressing concern that “price and wage-setting behavior could add to inflationary pressures.”
The bank reversed course just four months later in October, cutting its rate by half a point on Oct. 8.
benchmark lending
have recently watched an animated flick entitled “The Ant Bully”. It was because I expected it to be more touching as ‘A Bug’s Life” was. This was my second insect movie this year after “Bee Movie” and I like the latter better. Well, they both had this same theme of spotting out life in an insect’s perspective but the edge of Bee Movie over The Ant Bully was they had more depth to their story.Made me want to have money now to watch it again!Is there a benchmark lending in our country?
Anyways, so much for those movies. I am honest to say I’ve never bullied anyone before. I wasn’t that strong anyways. My role during my student life was the bully’s victim and they don’t have to look the same. To put in a nice way, some appeared to be exactly like a bully without even having the look of a bully. I hated them then. They made me wish to yell they borrow lives from benchmark lending.
The bullies in my life don”t have to be human also. For years. I’ve been bullied with my inferiority complex. There were times that I wished benchmark lending would have an available stocked confidence booster I can borrow. If only then I did not let that bully me, I would have been a much-improved person by now.
Well, don’t get me wrong, I must say I have improved these past few years. But I there were some experiences or should I say opportunities that I missed due this bully inside me. I was a coward then but I’ve learned now. With all the people believing in me and my capacity, I don’t think I’ll be needing benchmark lending for my confidence. Not that they have it anyways.
Anyways, so much for those movies. I am honest to say I’ve never bullied anyone before. I wasn’t that strong anyways. My role during my student life was the bully’s victim and they don’t have to look the same. To put in a nice way, some appeared to be exactly like a bully without even having the look of a bully. I hated them then. They made me wish to yell they borrow lives from benchmark lending.
The bullies in my life don”t have to be human also. For years. I’ve been bullied with my inferiority complex. There were times that I wished benchmark lending would have an available stocked confidence booster I can borrow. If only then I did not let that bully me, I would have been a much-improved person by now.
Well, don’t get me wrong, I must say I have improved these past few years. But I there were some experiences or should I say opportunities that I missed due this bully inside me. I was a coward then but I’ve learned now. With all the people believing in me and my capacity, I don’t think I’ll be needing benchmark lending for my confidence. Not that they have it anyways.
Benchmark lending
Thank you for your interest in Benchmark Mortgage's Home Loans and Benchmark Lending Programs.
A full-service Mortgage Banker and Lending as well as Broker, Benchmark was founded in 1999 as an affiliation of mortgage professionals. We're Dallas-based and support almost 400 branches nationwide. We are licensed in 45 states, have applications pending approval in 3 states and are in the application process with the final 2 states. We anticipate licensure in all 51 jurisdictions soon. We maintain an excellent reputation for closing loans in a timely and professional manner. Our company is founded on customer centricity and service that exceeds the expectations of our valued Branch Partners and their clients. We are growing rapidly and desire to become the premier branch provider in America.
Our portfolio of Benchmark lending products is wide-ranging. As large, full-service Mortgage Bankers, we have a warehouse capacity of $130 million monthly which we can double as required. This allows Benchmark to fund deals other brokers cannot entertain. And we typically offer lower pricing than can be obtained by borrowers going directly to these lenders. In addition to our direct lending we are approved with 200+ other banks and investors. We have direct access to all FNMA, FHMA, HUD and VA programs. Indeed, Benchmark is a "Full Eagle" Title II Non-Supervised FHA lender and a VA LAPP approved lender. We offer popular OptionARM's on our in-house banked line, featuring 1.50% start rates on loans up to $6 million. We also fund super Jumbo's and a variety of subprime loans including 100% loans to a 580 credit score with no MI and 95% LTV loans with no documentation. We're experts with Purchases, Refi's, One-Time Close Construction Loans, Home Improvement loans, 2nds, Investment Property loans, Debt Consolidation loans, Stated Income Lending and Damaged Credit loans.
A full-service Mortgage Banker and Lending as well as Broker, Benchmark was founded in 1999 as an affiliation of mortgage professionals. We're Dallas-based and support almost 400 branches nationwide. We are licensed in 45 states, have applications pending approval in 3 states and are in the application process with the final 2 states. We anticipate licensure in all 51 jurisdictions soon. We maintain an excellent reputation for closing loans in a timely and professional manner. Our company is founded on customer centricity and service that exceeds the expectations of our valued Branch Partners and their clients. We are growing rapidly and desire to become the premier branch provider in America.
Our portfolio of Benchmark lending products is wide-ranging. As large, full-service Mortgage Bankers, we have a warehouse capacity of $130 million monthly which we can double as required. This allows Benchmark to fund deals other brokers cannot entertain. And we typically offer lower pricing than can be obtained by borrowers going directly to these lenders. In addition to our direct lending we are approved with 200+ other banks and investors. We have direct access to all FNMA, FHMA, HUD and VA programs. Indeed, Benchmark is a "Full Eagle" Title II Non-Supervised FHA lender and a VA LAPP approved lender. We offer popular OptionARM's on our in-house banked line, featuring 1.50% start rates on loans up to $6 million. We also fund super Jumbo's and a variety of subprime loans including 100% loans to a 580 credit score with no MI and 95% LTV loans with no documentation. We're experts with Purchases, Refi's, One-Time Close Construction Loans, Home Improvement loans, 2nds, Investment Property loans, Debt Consolidation loans, Stated Income Lending and Damaged Credit loans.
Experience you can count on
For over a decade, Benchmark Lending has been helping home buyers and owners realize their dreams. As a primary lending institution, Benchmark is uniquely positioned to assist both refinancing and new mortgage customers. We take the time to understand you and your financial goals. We tailor loans that take into account your cash flow, payment timeframe, equity plans and investment opportunities. You will get a loan that won't break your budget and provides you the flexibility and resources to get the most out of your property investments.Our loan process is in one word easy, easy to understand, easy to complete and most of all easy to manage, because we handle all the hard work. Your personal Loan Officer will manage the application process, work with you through any and all credit issues and help ensure that every I is dotted and every T is crossed. They will carefully explain every detail of your mortgage so there are no surprises on your monthly bill. Our sole aim is to make the experience of financing a new or existing home absolutely painless. We will guarantee that you have a loan tailored to your specific financial needs.
Benchmark lending
For many people, becoming a homeowner is what the great American dream is all about. Like the three little pigs in the fairy tale, we grow up, leave our families and venture out into the world, aspiring to obtain a beautiful home where we can raise our children.Benchmark lending During the first half of the decade that dream became approachable for many families as interest rates plummeted. Subprime lenders and mortgage brokers devised creative strategies to enable people with lower incomes Benchmark lending and bad credit histories to obtain mortgages. As the more recent slump in the housing market reflects, however, many of those creative (and risky) strategies have failed and contributed to a sharp spike in foreclosure rates nationwide. A growing number of consumers are discovering they might lose their homes, unable to sustain their obligations as interest and property tax rates increase and introductory teaser rates on adjustable-rate mortgages vanish.
According to RealtyTrac, Inc., foreclosure rates nationally rose 27 percent Benchmark lending in the first quarter of 2007 over the previous quarter and were up 35 percent from the same period in 2006. Foreclosure rate increases in Minnesota were even more startling, reflecting a 35 percent increase over the previous quarter and as much as a 130 percent increase over the first quarter of 2006. The spike in foreclosures and a related downturn in the housing market have sent ripple effects throughout the national economy, causing regulators and consumer advocacy groups to stand up Benchmark lending and take notice. Everyone is pointing a finger at someone and asking, “Who is to blame?”
Benchmark lending
In actuality there is no single “big bad wolf” who is responsible for the crisis in the housing market, but rather, many players are involved. The one thing that regulators all appear to agree upon, however, is that fixing the problem demands clamping down on predatory lending practices and ramping up enforcement actions against mortgage fraud.
Mortgage fraud can take many different forms, and may be perpetrated by a variety of players. Mortgage fraud investigations frequently target mortgage brokers, who process mortgage applications, act as intermediaries between buyers and lenders, and are at the center of many Benchmark lending transactions. Because they are typically paid commissions for their services based on loan amounts, mortgage brokers are strongly motivated to obtain lenders’ approval for buyers’ applications. Brokers who become overzealous in seeking such approval may find themselves on the wrong side of a civil or even criminal fraud investigation.Benchmark lending A typical example is the broker who is alleged to have intentionally overstated the buyer’s income or assets on an application in order to dupe the lender into approving it.
This kind of approval became easier to obtain with the advent of “no-documentation” or “stated-income” loan transactions. In these transactions, a borrower pays a higher interest rate and the lender, in exchange, relies on the income representations made on the application without demanding supporting documentation or making substantial efforts to verify those representations. Minnesota Attorney General Lori Swanson argued for regulations against stated-income loans in Benchmark lending testimony before the Board of Governors of the Federal Reserve System on June 14, 2007. According to Attorney General Swanson, the intended purpose of stated-income loans is to provide an avenue of approval for self-employed individuals and others whose income is not derived from a regular paycheck subject to verification. Instead, she says, they have become an avenue for unscrupulous brokers who have falsified applications “to claim that octogenarians hauled in cash by making bird houses they didn’t make or cleaning houses they didn’t clean, that a gardener in his early 20s made $6,000 per month as a ‘landscape engineer,’ or that a suburban couple earned money renting out a nonexistent apartment in their home.”
A mortgage broker who intentionally inflates a buyer’s income may feel morally justified in doing so, on the ground that he is helping the buyer obtain a home that otherwise she would not be able to afford. The broker may point out that many such transactions are successful: When the buyers are able to meet their Benchmark lending obligations everyone wins, including the lender. Such is not the case, however, when the buyer finds herself overextended and cannot make the required payments. Then the buyer loses the home and the lender typically sustains substantial losses when the outstanding balance is not recovered in the foreclosure sale.
Benchmark lending
Although mortgage brokers are easy political targets for state and federal regulators attempting to assign blame, it should be acknowledged that the buyers themselves are often at fault. Buyers may intentionally inflate their own incomes, with or without the brokers’ knowledge, and place themselves in the precarious position of assuming obligations they cannot afford. To view the problem solely as an issue of mortgage industry opportunists taking advantage of poor, unsophisticated consumers is to ignore the responsibility that some buyers share for making their own bad decisions. After all, the moral of the fairy tale is not simply that wolves are bad, but rather, that smart pigs will not build their houses out of straw.
Buyers may become embroiled in mortgage fraud investigations in other ways, as well. Take, for example, the case of Isadore Stewart and Jill Lehn. In December 2006, Stewart, a real estate buyer, and Lehn, a closing agent, pleaded guilty in federal court in Minnesota to criminal wire fraud charges arising from mortgage transactions. According to court documents filed in the case, Lehn prepared closing documents related to over 60 real estate transactions that deliberately overstated the true purchase price for the properties. Lehn allegedly concealed from lenders the fact that a portion of the loan proceeds would be redistributed to buyers, such as Stewart, and other parties. The government alleges that buyers obtained a total of over $3 million in concealed payments in these transactions, and that Stewart personally derived over $271,000 from three separate real estate purchases. Neither Stewart nor Lehn has yet been sentenced, but both face maximum potential penalties of up to 20 years in prison and $250,000 fines.
As the case of Stewart and Lehn suggests, mortgage fraud investigations tend to focus not on individuals acting alone, but rather, on an alleged conspiracy of individuals, each of whom may play a different role in the transactions at issue. Such is the case in a typical “flipping” scheme. Flipping occurs when a real estate investor purchases a home and then resells it within a short period of time for a higher price. Usually there is nothing illegal about these transactions and, when the buyer makes improvements to the home before reselling it, the practice can be beneficial to a community by raising property values. Flipping becomes fraudulent, however, when the investor colludes with a dishonest appraiser, who intentionally overstates the appraised value of the home so that the investor can resell it for a grossly inflated profit. A flipping scheme can take advantage of an unsuspecting buyer or, when the buyer himself is a participant in the conspiracy, leave the lender holding substantial losses when the buyer allows the home to go into foreclosure and the lender is unable to recover the outstanding balance of the loan.
“Equity stripping” is another practice that has raised concerns among regulators. Equity stripping typically targets homeowners who are experiencing financial distress, have fallen behind in their mortgage payments, and are facing a risk of foreclosure. Usually a homeowner attempts to refinance and is turned down by the lender. A foreclosure notice is published in the local newspaper and is read by a “foreclosure rescue” firm, which approaches the troubled homeowner offering help. The foreclosure rescuer pays off the balance owed in foreclosure, acquires title to the home, and agrees to reconvey the property to the homeowner under the terms of a lease or contract for deed. This kind of arrangement may be considered predatory if the terms of the lease or contract are unreasonably high, resulting in the homeowner’s inability to pay and ultimate eviction from the home, while the “rescue” firm retains ownership and the homeowner’s equity in it. It becomes fraudulent if the firm knowingly misleads the homeowner about any of the terms of the arrangement.
In June of this year, the Minnesota Office of the United States Attorney led a grand jury to indict a former mortgage broker and his assistant in an alleged equity-stripping scheme that went a step further. According to the indictment, they encouraged distressed homeowners to refinance and then used physical intimidation to force the homeowners to endorse the equity checks produced in the refinancing process over to themselves. The two now face charges carrying a maximum potential penalty of 20 years in prison.
Such bold schemes are not uncommon. The United States Attorney’s Office also had the president of a title and escrow company indicted this past June. The indictment alleges that she opened an escrow account to deposit funds from lenders for real estate closings, but then transferred the money to her own personal account and used it to pay about $2.5 million in personal expenses.
Not all problems in the housing market can be attributed to blatant misconduct. Commentators are also raising concerns about lending practices that are not illegal, but nevertheless may be viewed as predatory. They point to insufficient disclosures to consumers, overly ambitious prepayment penalties, and exorbitant closing costs. Brokers are not the only parties implicated by these concerns. Commentators also point to lawyers who fail to properly advise their clients of the risks associated with transactions, lenders who fail to apply sufficiently rigorous underwriting standards, and even secondary market investors — who some argue should be liable to homebuyers for failing to conduct proper due diligence before taking assignment of questionable loans.
Benchmark lending
Concerns about mortgage fraud and predatory lending practices have led state and federal lawmakers to push for new legislation targeted at cleaning up the mortgage industry. On May 14 of this year, Governor Tim Pawlenty signed a predatory lending practices law (S.F. No. 988) that — for the first time in Minnesota — specifically defines residential mortgage fraud as a criminal offense. Under the terms of the new law, which went into effect on August 1, “residential mortgage fraud” is defined as knowingly making or using any misstatement, misrepresentation or omission that is both “deliberate” and “material” during the “mortgage lending process” with the intent that any party to the mortgage lending process rely upon it. The “mortgage lending process” includes virtually every step in a mortgage transaction, including solicitation, application or origination, negotiation of terms, third-party provider services, underwriting, signing and closing, and funding of the loan. Documents involved in this process include required disclosures, loan applications, appraisal reports, HUD-1 settlement statements, and supporting personal documentation for income verification, such as W-2 forms, bank statements, tax returns and payroll stubs. Violating the law can lead to a felony conviction with a maximum term of imprisonment of two years, and mandatory restitution to any identified victims. In addition to enacting new criminal penalties, the law also contains provisions prohibiting prepayment penalties for subprime loans and creates a private civil right of action for borrowers injured by violations of the affected statutes and other state mortgage laws.
This new law joins another new predatory lending practices law approved by Governor Pawlenty on April 20 (H.F. No. 1004), which also became effective August 1. Although the new law establishes no new criminal penalties, H.F. No. 1004 included a number of provisions targeted at predatory lending practices, including: a prohibition against stated-income loans; a requirement that mortgage originators verify borrowers’ ability to make scheduled payments; a prohibition against “churning” (arranging a refinance that provides no tangible benefit to the buyer); a requirement that originators make disclosures to buyers about anticipated property taxes and hazard insurance costs; a prohibition against mortgage repayment options resulting in negative amortization; and a provision establishing fiduciary duties owed by mortgage brokers to borrowers as their agents.
These new laws complement Minnesota’s equity-stripping statute, which was enacted in 2004 and codified at Minn. Stat. ch. 325N. That law imposes strict disclosure and other requirements on any investor who purchases a home in foreclosure and subsequently reconveys or promises to reconvey continuing rights to the homeowner to possess the property. The equity-stripping statute creates criminal penalties against any such investor who defrauds a homeowner, including imprisonment of up to one year and fines of up to $50,000 (Minn. Stat. §325N.18).
Benchmark lending
Federal regulators are similarly working to strengthen legislation against mortgage fraud and predatory lending practices. On July 12, Rep. Spencer Bachus and several other representatives introduced a 71-page bill to establish the “Fair Mortgage Practices Act of 2007” (H.R. 3012). Many of the provisions of the bill would explicitly preempt state law on the same subject, including certain applications of Minnesota’s new predatory lending laws. The proposed legislation addresses mortgage fraud and predatory lending practices on multiple substantive and procedural fronts. Its requirements are too voluminous and complex to describe here in exhaustive detail, but some of its more innovative provisions are worth noting.
The bill seeks to establish a national registry and licensing system for residential mortgage originators which would, among other things, require registrants to undergo background checks and provide fingerprints and would deny licensure to applicants with felony convictions during the prior seven-year period. The bill also mandates consumer-counseling referrals and the use of escrow accounts in connection with subprime mortgages. The proposed legislation imposes additional duties on the Department of Housing and Urban Development (HUD), creating a separate “Office of Housing Counseling” within HUD, and requiring HUD to conduct a study into the root causes of foreclosures. The proposal places limits on the assessment of prepayment penalties for certain hybrid fixed-rate/adjustable-rate mortgages, and contains an antiflipping provision that mandates a second appraisal for homes resold within the first six months after purchase. Finally, if this bill is passed, the federal government will appropriate an additional $20 million for fiscal years 2008-2012 “for the purpose of enhancing the efforts of the Department of Justice and the Federal Bureau of Investigation to prevent, investigate, and prosecute mortgage fraud.”
Benchmark lending
The new legislation mushrooming at both the state and federal levels in response to the housing crisis sends a strong message to professionals operating in the residential housing market that unscrupulous conduct will not be tolerated. With increased legislation and heightened scrutiny comes increased enforcement. Attorney General Lori Swanson has made clear in statements to the public that ending mortgage abuse is a high enforcement priority for the state of Minnesota. In addition to addressing the Federal Reserve last June, she made a presentation to the U.S. House of Representatives Financial Services Committee on August 9, in which she forcefully advocated for stronger federal legislation against predatory lending practices. This issue has also become a high enforcement priority for the federal government. In its Financial Crimes Report to the Public for fiscal year 2006, the Federal Bureau of Investigation reported an increase in pending cases related to mortgage fraud from 436 in 2003 to 818 in 2006 — an increase of over 87 percent in just three years. If Congress appropriates an additional $20 million for these investigations over the next five years, those numbers are likely to increase even more dramatically. When law enforcement agencies put an entire industry under the microscope everyone involved feels the impact, because with increased enforcement comes a substantial risk of over-enforcement. Wide traps set for the big, bad wolf are likely to catch a lot of innocent parties, too. Even honest practitioners may find themselves under investigation for alleged crimes in which they were no more than unwitting participants. Although these unfortunate companies and individuals will have strong defenses to any criminal charges levied against them, the emotional toll on individuals and the costs of defense — in legal fees, lost productivity and lost business — may be devastating. For these reasons, anyone working in the residential mortgage industry should tread very carefully. It is important to exercise caution and avoid even the appearance of wrongdoing, so that the propriety of any transaction under scrutiny is indisputable.
According to RealtyTrac, Inc., foreclosure rates nationally rose 27 percent Benchmark lending in the first quarter of 2007 over the previous quarter and were up 35 percent from the same period in 2006. Foreclosure rate increases in Minnesota were even more startling, reflecting a 35 percent increase over the previous quarter and as much as a 130 percent increase over the first quarter of 2006. The spike in foreclosures and a related downturn in the housing market have sent ripple effects throughout the national economy, causing regulators and consumer advocacy groups to stand up Benchmark lending and take notice. Everyone is pointing a finger at someone and asking, “Who is to blame?”
Benchmark lending
In actuality there is no single “big bad wolf” who is responsible for the crisis in the housing market, but rather, many players are involved. The one thing that regulators all appear to agree upon, however, is that fixing the problem demands clamping down on predatory lending practices and ramping up enforcement actions against mortgage fraud.
Mortgage fraud can take many different forms, and may be perpetrated by a variety of players. Mortgage fraud investigations frequently target mortgage brokers, who process mortgage applications, act as intermediaries between buyers and lenders, and are at the center of many Benchmark lending transactions. Because they are typically paid commissions for their services based on loan amounts, mortgage brokers are strongly motivated to obtain lenders’ approval for buyers’ applications. Brokers who become overzealous in seeking such approval may find themselves on the wrong side of a civil or even criminal fraud investigation.Benchmark lending A typical example is the broker who is alleged to have intentionally overstated the buyer’s income or assets on an application in order to dupe the lender into approving it.
This kind of approval became easier to obtain with the advent of “no-documentation” or “stated-income” loan transactions. In these transactions, a borrower pays a higher interest rate and the lender, in exchange, relies on the income representations made on the application without demanding supporting documentation or making substantial efforts to verify those representations. Minnesota Attorney General Lori Swanson argued for regulations against stated-income loans in Benchmark lending testimony before the Board of Governors of the Federal Reserve System on June 14, 2007. According to Attorney General Swanson, the intended purpose of stated-income loans is to provide an avenue of approval for self-employed individuals and others whose income is not derived from a regular paycheck subject to verification. Instead, she says, they have become an avenue for unscrupulous brokers who have falsified applications “to claim that octogenarians hauled in cash by making bird houses they didn’t make or cleaning houses they didn’t clean, that a gardener in his early 20s made $6,000 per month as a ‘landscape engineer,’ or that a suburban couple earned money renting out a nonexistent apartment in their home.”
A mortgage broker who intentionally inflates a buyer’s income may feel morally justified in doing so, on the ground that he is helping the buyer obtain a home that otherwise she would not be able to afford. The broker may point out that many such transactions are successful: When the buyers are able to meet their Benchmark lending obligations everyone wins, including the lender. Such is not the case, however, when the buyer finds herself overextended and cannot make the required payments. Then the buyer loses the home and the lender typically sustains substantial losses when the outstanding balance is not recovered in the foreclosure sale.
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Although mortgage brokers are easy political targets for state and federal regulators attempting to assign blame, it should be acknowledged that the buyers themselves are often at fault. Buyers may intentionally inflate their own incomes, with or without the brokers’ knowledge, and place themselves in the precarious position of assuming obligations they cannot afford. To view the problem solely as an issue of mortgage industry opportunists taking advantage of poor, unsophisticated consumers is to ignore the responsibility that some buyers share for making their own bad decisions. After all, the moral of the fairy tale is not simply that wolves are bad, but rather, that smart pigs will not build their houses out of straw.
Buyers may become embroiled in mortgage fraud investigations in other ways, as well. Take, for example, the case of Isadore Stewart and Jill Lehn. In December 2006, Stewart, a real estate buyer, and Lehn, a closing agent, pleaded guilty in federal court in Minnesota to criminal wire fraud charges arising from mortgage transactions. According to court documents filed in the case, Lehn prepared closing documents related to over 60 real estate transactions that deliberately overstated the true purchase price for the properties. Lehn allegedly concealed from lenders the fact that a portion of the loan proceeds would be redistributed to buyers, such as Stewart, and other parties. The government alleges that buyers obtained a total of over $3 million in concealed payments in these transactions, and that Stewart personally derived over $271,000 from three separate real estate purchases. Neither Stewart nor Lehn has yet been sentenced, but both face maximum potential penalties of up to 20 years in prison and $250,000 fines.
As the case of Stewart and Lehn suggests, mortgage fraud investigations tend to focus not on individuals acting alone, but rather, on an alleged conspiracy of individuals, each of whom may play a different role in the transactions at issue. Such is the case in a typical “flipping” scheme. Flipping occurs when a real estate investor purchases a home and then resells it within a short period of time for a higher price. Usually there is nothing illegal about these transactions and, when the buyer makes improvements to the home before reselling it, the practice can be beneficial to a community by raising property values. Flipping becomes fraudulent, however, when the investor colludes with a dishonest appraiser, who intentionally overstates the appraised value of the home so that the investor can resell it for a grossly inflated profit. A flipping scheme can take advantage of an unsuspecting buyer or, when the buyer himself is a participant in the conspiracy, leave the lender holding substantial losses when the buyer allows the home to go into foreclosure and the lender is unable to recover the outstanding balance of the loan.
“Equity stripping” is another practice that has raised concerns among regulators. Equity stripping typically targets homeowners who are experiencing financial distress, have fallen behind in their mortgage payments, and are facing a risk of foreclosure. Usually a homeowner attempts to refinance and is turned down by the lender. A foreclosure notice is published in the local newspaper and is read by a “foreclosure rescue” firm, which approaches the troubled homeowner offering help. The foreclosure rescuer pays off the balance owed in foreclosure, acquires title to the home, and agrees to reconvey the property to the homeowner under the terms of a lease or contract for deed. This kind of arrangement may be considered predatory if the terms of the lease or contract are unreasonably high, resulting in the homeowner’s inability to pay and ultimate eviction from the home, while the “rescue” firm retains ownership and the homeowner’s equity in it. It becomes fraudulent if the firm knowingly misleads the homeowner about any of the terms of the arrangement.
In June of this year, the Minnesota Office of the United States Attorney led a grand jury to indict a former mortgage broker and his assistant in an alleged equity-stripping scheme that went a step further. According to the indictment, they encouraged distressed homeowners to refinance and then used physical intimidation to force the homeowners to endorse the equity checks produced in the refinancing process over to themselves. The two now face charges carrying a maximum potential penalty of 20 years in prison.
Such bold schemes are not uncommon. The United States Attorney’s Office also had the president of a title and escrow company indicted this past June. The indictment alleges that she opened an escrow account to deposit funds from lenders for real estate closings, but then transferred the money to her own personal account and used it to pay about $2.5 million in personal expenses.
Not all problems in the housing market can be attributed to blatant misconduct. Commentators are also raising concerns about lending practices that are not illegal, but nevertheless may be viewed as predatory. They point to insufficient disclosures to consumers, overly ambitious prepayment penalties, and exorbitant closing costs. Brokers are not the only parties implicated by these concerns. Commentators also point to lawyers who fail to properly advise their clients of the risks associated with transactions, lenders who fail to apply sufficiently rigorous underwriting standards, and even secondary market investors — who some argue should be liable to homebuyers for failing to conduct proper due diligence before taking assignment of questionable loans.
Benchmark lending
Concerns about mortgage fraud and predatory lending practices have led state and federal lawmakers to push for new legislation targeted at cleaning up the mortgage industry. On May 14 of this year, Governor Tim Pawlenty signed a predatory lending practices law (S.F. No. 988) that — for the first time in Minnesota — specifically defines residential mortgage fraud as a criminal offense. Under the terms of the new law, which went into effect on August 1, “residential mortgage fraud” is defined as knowingly making or using any misstatement, misrepresentation or omission that is both “deliberate” and “material” during the “mortgage lending process” with the intent that any party to the mortgage lending process rely upon it. The “mortgage lending process” includes virtually every step in a mortgage transaction, including solicitation, application or origination, negotiation of terms, third-party provider services, underwriting, signing and closing, and funding of the loan. Documents involved in this process include required disclosures, loan applications, appraisal reports, HUD-1 settlement statements, and supporting personal documentation for income verification, such as W-2 forms, bank statements, tax returns and payroll stubs. Violating the law can lead to a felony conviction with a maximum term of imprisonment of two years, and mandatory restitution to any identified victims. In addition to enacting new criminal penalties, the law also contains provisions prohibiting prepayment penalties for subprime loans and creates a private civil right of action for borrowers injured by violations of the affected statutes and other state mortgage laws.
This new law joins another new predatory lending practices law approved by Governor Pawlenty on April 20 (H.F. No. 1004), which also became effective August 1. Although the new law establishes no new criminal penalties, H.F. No. 1004 included a number of provisions targeted at predatory lending practices, including: a prohibition against stated-income loans; a requirement that mortgage originators verify borrowers’ ability to make scheduled payments; a prohibition against “churning” (arranging a refinance that provides no tangible benefit to the buyer); a requirement that originators make disclosures to buyers about anticipated property taxes and hazard insurance costs; a prohibition against mortgage repayment options resulting in negative amortization; and a provision establishing fiduciary duties owed by mortgage brokers to borrowers as their agents.
These new laws complement Minnesota’s equity-stripping statute, which was enacted in 2004 and codified at Minn. Stat. ch. 325N. That law imposes strict disclosure and other requirements on any investor who purchases a home in foreclosure and subsequently reconveys or promises to reconvey continuing rights to the homeowner to possess the property. The equity-stripping statute creates criminal penalties against any such investor who defrauds a homeowner, including imprisonment of up to one year and fines of up to $50,000 (Minn. Stat. §325N.18).
Benchmark lending
Federal regulators are similarly working to strengthen legislation against mortgage fraud and predatory lending practices. On July 12, Rep. Spencer Bachus and several other representatives introduced a 71-page bill to establish the “Fair Mortgage Practices Act of 2007” (H.R. 3012). Many of the provisions of the bill would explicitly preempt state law on the same subject, including certain applications of Minnesota’s new predatory lending laws. The proposed legislation addresses mortgage fraud and predatory lending practices on multiple substantive and procedural fronts. Its requirements are too voluminous and complex to describe here in exhaustive detail, but some of its more innovative provisions are worth noting.
The bill seeks to establish a national registry and licensing system for residential mortgage originators which would, among other things, require registrants to undergo background checks and provide fingerprints and would deny licensure to applicants with felony convictions during the prior seven-year period. The bill also mandates consumer-counseling referrals and the use of escrow accounts in connection with subprime mortgages. The proposed legislation imposes additional duties on the Department of Housing and Urban Development (HUD), creating a separate “Office of Housing Counseling” within HUD, and requiring HUD to conduct a study into the root causes of foreclosures. The proposal places limits on the assessment of prepayment penalties for certain hybrid fixed-rate/adjustable-rate mortgages, and contains an antiflipping provision that mandates a second appraisal for homes resold within the first six months after purchase. Finally, if this bill is passed, the federal government will appropriate an additional $20 million for fiscal years 2008-2012 “for the purpose of enhancing the efforts of the Department of Justice and the Federal Bureau of Investigation to prevent, investigate, and prosecute mortgage fraud.”
Benchmark lending
The new legislation mushrooming at both the state and federal levels in response to the housing crisis sends a strong message to professionals operating in the residential housing market that unscrupulous conduct will not be tolerated. With increased legislation and heightened scrutiny comes increased enforcement. Attorney General Lori Swanson has made clear in statements to the public that ending mortgage abuse is a high enforcement priority for the state of Minnesota. In addition to addressing the Federal Reserve last June, she made a presentation to the U.S. House of Representatives Financial Services Committee on August 9, in which she forcefully advocated for stronger federal legislation against predatory lending practices. This issue has also become a high enforcement priority for the federal government. In its Financial Crimes Report to the Public for fiscal year 2006, the Federal Bureau of Investigation reported an increase in pending cases related to mortgage fraud from 436 in 2003 to 818 in 2006 — an increase of over 87 percent in just three years. If Congress appropriates an additional $20 million for these investigations over the next five years, those numbers are likely to increase even more dramatically. When law enforcement agencies put an entire industry under the microscope everyone involved feels the impact, because with increased enforcement comes a substantial risk of over-enforcement. Wide traps set for the big, bad wolf are likely to catch a lot of innocent parties, too. Even honest practitioners may find themselves under investigation for alleged crimes in which they were no more than unwitting participants. Although these unfortunate companies and individuals will have strong defenses to any criminal charges levied against them, the emotional toll on individuals and the costs of defense — in legal fees, lost productivity and lost business — may be devastating. For these reasons, anyone working in the residential mortgage industry should tread very carefully. It is important to exercise caution and avoid even the appearance of wrongdoing, so that the propriety of any transaction under scrutiny is indisputable.
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