As many of you know, I own a mortgage brokerage firm in Florida and have been in this industry for the past 15 years. As we all know, many homeowners are seeking payment relief and looking for the best rates to lower their payment obligations especially in light of the well publicized economic situation. Here’s the latest silliness that will benefit the banking industry and money lenders at the expense of homeowners.
Fannie Mae & Freddie Mac currently own billions of mortgages in this country. Again, they OWN these loans. In their ever so generous way, they’ve announced that they’ll allow many borrowers with rates over 5.50% to REFINANCE under certain guidelines. How kind of them. Please understand what I just wrote. They’ll ALLOW certain borrowers to “REFINANCE†which entails a higher loan balance by adding closing costs and fees to the lenders, brokers, title insurance companies, credit agencies and appraisers IF these certain borrowers can justify their income, credit, payment histories etc. We’re talking about loans that are already on the books. In addition to all the fees the borrower now has to deal with adding MORE years to their loan. Translation: More interest to be paid to the owners of the loans. Now, here’s the question homeowners should be asking: “If Fannie or Freddie already owns the loan…AND they’re going to get the NEW LOAN too, why not, just do a MODIFICATION of interest rate instead of encouraging a whole new refinance transaction with all of it’s additional costs etc?†In other words, “why not do something FOR the borrowers and homeowners instead of something for the banking and credit industry?†Here’s a corollary question: “Why not just unilaterally lower everyone’s payment across the board instead of only a select few?†The answer came to me this week while I was talking to a wholesale representative of a VERY large bank. The answer when I posed these questions was “To help the banks and their originators earn more money.†Again, the ‘bailouts’ and measures ostensibly to benefit homeowners is really a cover to benefit industry and corporate interests. Because the ‘Feds’ have stepped in to regulate Freddie Mac and Fannie Mae and ‘run the show’ shouldn’t they be doing something for the people….finally? I’m afraid, like usual, this is just more evidence of the fact that the banking industry owns Washington. I’m remiss that I didn’t see through this charade years ago.
Incidentally, were YOU aware that the “Federal†Reserve is not Federal?? As excerpted from G. Edward Griffin’s book referring to the “Federal†Reserve entitled The Creature From Jekyll Island, he says of the Fed: “It is an association of the large commercial banks which has been granted special privileges by Congress. A more accurate description would be simply that it is a cartel protected by federal law.†It makes more sense now when you hear that the government along with Fannie, Freddie and the Federal Reserve are just helping all the good ‘ole boys on Wall Street and in the banking business…and screwing homeowners.
For Financial Consultation of any kind including prudent real estate acquisition and mortgage financing strategies, Eric Johnson can be reached at 1.888.390.5697 or [email protected]
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