Private Mortgage Insurance Backlash

In the old days if you got approved for a loan at the bank for a home mortgage, the private mortgage insurance was an automatic. The private mortgage insurance (PMI) was a protection policy the banks required if you were putting less than 20% down. It would insure the first 20% of the loan so the banks would feel safe in loaning you the money.

This has worked very well for decades to keep the whole system moving. The PMI companies have been making tons and tons of money from you and me on all our home mortgages which we did not default on.

Suddenly because of the banking industry screw up, the PMI companies have displayed a “knee-jerk” policy. You know the concept of the pendulum swing? Well, they are at the extreme right with over-critiquing every application that crosses their desk! Not only is it adding weeks on to the process, but they are turning down solid deals for insignificant reasons!

I could go on and on about this whole craziness going on in the home mortgage process, but I think I have said enough. If you have had a problem with the PMI companies with your home mortgage process, tell me about it.

Federal Bailout—Helping Banks? or Homeowners?

We have all been reading and hearing about the bail out programs for the banking industry. The numbers are staggering of the billions of dollars appropriated by the government for this relief!

Those of us in real estate know how this developed and how the banking industry created their own problem by lowering the standards for getting a loan, especially for the investors.

Today thousands of homeowners are upside-down with their mortgages. This means they owe more on the loan than the property is worth. When this happened, the investors walked away from the properties, leaving them vacant. I remember hearing from a Realtor in Las Vegas after the crash that there were over 10,000 homes vacant that had never been lived in. Wow! Can you picture that?

However, a homeowner who is living in their home with their family, has no choice but to stay and stick it out. So along comes the government, spending yours and my tax dollars to bail out the banking industry. Many of us were naïve in thinking that the plan would include the individual homeowners who at no fault of their own was put in a bad situation.

This all hit home to me yesterday when I met with a homeowner who had lost her income because of the economy and had been struggling for the past 10 months to keep her head above water.

She had not made a mortgage payment since August, but had tried to contact the bank to talk to someone who could offer some advice or help. No luck! Months had gone by and suddenly she gets a letter saying they are going to help her! Wow, really??

Tell me if this is helping her, they sent her a document to sign within 5 days which was a new mortgage document. Here are the terms, they were adding $12,000 in late charges and attorney’s fees to her mortgage balance, then charging her 7% when the going rate is 5% and then amortizing the remaining loan over 40 years!

Doesn’t it make you mad? It does me! What is this money, yours and my tax money, being used for if not for people who have been affected by the downfall of the economy? I would like you to join me in contacting your representatives and senators and ask then why aren’t the American people being helped! Thanks, if we each do what we can, it will make a difference!