RESPA riddles for mortgage loan brokers
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This article distinguishes a mortgage loan controlled by the Real Estate Settlement and Procedures Act (RESPA) from a non-RESPA loan, and helps mortgage loan brokers (MLBs) identify which loans qualify for RESPA protection.
Once upon a loan
Consider a real estate investor who funds the acquisition of one-to-four unit single family residences (SFRs) by borrowing 70% of his purchase price from a mortgage lender. The investor does not occupy any of the residential properties purchased with the borrowed funds as his principal residence. Rather, he acquires them for the business purpose of his real estate investment operation.
The investor submits payments for one of his SFR mortgages to the lender but the lender misapplies the payment to another mortgage made to the same investor. As a result, the unpaid loan becomes delinquent. The lender commences foreclosure while working with the investor to get the accounting corrected – the misleading dual-track foreclosure situation. [For more information on dual-track foreclosures, see the March 2012 first tuesday article, Is $18 billion enough for California homeowners?]
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About The Author
ft Editorial Staff
is the writing staff comprised of legal editor Fred Crane, In-House Broker Consultant Fernando Nunez and writer-editors Connor P. Wallmark, Giang Hoang-Burdette, Jeffery Marino, Carrie B. Reyes, Sarah Cantino, Matthew Taylor, Matthew Shade and Nicole Jessen.
If you have saved up 20% cash down payment, plus all cinslog costs, plus 3-6 months of reserves, and have very good to excellent credit (680 or better), low/no debt, sufficient income, and the house appraises well, you should not have a problem. Also, you are usually better off starting with your bank, if you have a good relationship track record with them, plus your down, etc, there.Do beware that foreclosure rates are rising, and prices are about to drop further. This month is a low-ebb in mortgage resets and recasts, but they start taking a giant leap next month. This bodes ill for foreclosure rates and house prices! You must have a good chunk of cash in the deal or forget the whole idea of buying a house right now.
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