This is a follow up to last Friday where we were talking about a subtle move at the FHFA that could mean higher rates and fees for borrowers.
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CFPB, FHFA, MBA, Mortgage Insurance
Subtle FHFA Move Could Mean Higher Rates and Fees
admin - Friday November 20, 2015
What's the harm in ensuring the market (consumers) are getting charged the fair market rate on Mortgage Insurance? At a minimum I think consumers should be notified by the lender that the rate they will be charged for Mortgage Insurance could be higher or lower with another lender. Until this issue came up I had no idea Mortgage Insurance could differ between lenders, depending on where the lender is purchasing the insurance. As for REIT's I will have to do more research to really form an opinion but I see no reason they shouldn't be allowed to obtain the insurance as long as there is no risk to the tax payers if a default occurs.
You lost me at hello
Wow – Naivety must suit you. First, you "had no idea Mortgage Insurance could differ between lenders" then you want to ensure that "(consumers) are getting charged the fair market rate on Mortgage Insurance".
Let me help enlighten you: 1) the cost for *anything* differs if there is more than one company supplying it and 2) When was the last time that the government "ensured" anything? Every time the government gets in the game, they wind up costing people more, causing more confusion and somehow lining its own pocket and growing larger in the process.
The differences in the amounts that any one company would charge for MI versus another are insignificant to the problems that could arise if people didn't take the mortgage as a package deal. What sort of surcharge would a company require if you didn't use their preferred insurance company? Would splitting the MI off from the loan package allow people to change MI during the course of the loan because another is less expensive?
Will this move MI to be all lender paid?
Not really, it just means that certain lenders won't be able to make use of the FHLB money which provides a lot of liquidity. Hence it could cause an increase in rates and fees with many lenders.
Tim Lass The problem that I see is the practice of FORCING someone to use their insurance, and cancelling/denying a loan unless they use their provider. So, if I'm following this correctly, some people are already smart enough to be shopping for their mortgage insurance provider, but being denied a loan for choosing another provider. Seems simple, if someone is going to take it upon themselves to shop or choose another provider, don't cancel their loan. What % of people have the desire or knowledge to do this anyway? It's great to have 1-stop shopping for everything, but being forced to or denied a loan is the issue, as I see it. I still think the vast majority of people do and would take what is in front of them for mortgage insurance regardless. Enlighten me if I am missing something, I would like to learn more. Thanks.
Matt Mozurkewich Oh Please! The lender, their interest rate and their MI rate are all part of a package that people can shop now. There is lots more to shopping a lender than just their rate. No one is FORCING you to use a lender – you get to choose the one you want. Just try buying a car without SIRIUS radio now. You can get one without it, but it takes a special order. If you want a loan with a particular MI rate – find the right lender!
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