On Monday, the
Federal Reserve board announced that it had approved an interim final rule that would require that consumers are notified when their mortgage loan has been sold or transferred. This new rule follows in support of legislation passed by Congress in May that aimed to make homeowners more aware of who owns their mortgage, in a statement by the Fed.
Since the start of the housing crisis, many homeowners had difficulty figuring out who owns their
mortgage, and who to contact with concerns on their loans or for modifications. The legislation in May began requiring mortgage purchasers or assignees to notify homeowners in writing with 30 days of acquiring their loan.
The changes the Fed made were in Regulation Z, its rule for
Truth in Lending Act disclosures, to "provide compliance guidance and greater certainty on the new requirements."
The Fed stated that it is making compliance with the new Fed rule option for 60 days to allow for changes by lenders and investors, along within soliciting comments for 60 days prior to deciding on a permanent rule. The Fed also warned however that mortgage purchasers or assignees were still subject of the requirements of the Federal Statute.
The short-lived party regarding mortgage applications increasing after a four-week fall has ended. On Wednesday, the Mortgage Bankers Association reported that for the week ending November 13th, mortgage applications reduced 2.5%. Refinances also took a small hit, with a reduction in applications of about 1.4%, despite a 1.4% increase in refinance activity.
In contrast however, mortgage rates dropped marginally:
- 30 year fixed-rate mortgage decreased to 4.83% (-0.06%)
- 15 year fixed-rate mortgage decreased to 4.32% (-0.01%)
- One-year ARMs decreased to 6.82% (-0.03%)
So the mortgage industry remains on a roller-coaster for the near future.
Lastly in this week's recap, Massachusetts Representative Barney Frank, The House Financial Services Committee chairman is floating a proposal to help unemployed homeowners.
His proposal is to use the interest that the government collects from the Federal financial bailout fund and use those funds to give loans to unemployed homeowners who are struggling to pay their mortgages.
Rep. Barney Frank said on Monday at appearances in Fall River and New Bedford, that "the plan would enable people who've lost their jobs to continue making mortgage payments until they get another job."
A recent report by a congressional oversight panel suggested the $50 billion program by the Obama Administration "was not designed to address foreclosures caused by unemployment" which has now risen as the main cause of default.
By: Favian Clai
