Inman News published a report that we may be seeing some new legislation that would mortgage fraud a second degree felony here in Utah.  We’re currently the second worst state in the nation for mortgage fraud (source), per capita.

As it stands now, the bill would view mortgage fraud much like racketeering, which would allow the state to seize illegally gotten assets in order to provide restitution to victims.

This would be a welcome change, in my opinion.   I’m not big on bigger goverment, but this is clearly a case where the goverment should be involved because it involves the enforcement of property rights.

Rep. Paul Ray from Clearfield is helping push this through – thanks Paul!

I know, I know. The title is a bit, shall we say, amgibuous (and that’s being generous). The point is that not all “free credit reports” are created equally. The ads you see on TV and online for free credit reports usually come with strings attached: costly monthly credit monitoring service.

Credit monitoring basically keeps an eye out, in your behalf, of any new blips on your credit report that transpire from month-to-month. These blips could range from new credit inquiries to new reported late payments and collections/judgements. All can have a negative impact on your options when it comes time to purchase a new home or refinance your existing mortgage.

Is credit monitoring a valuable service, and worth the monthly fee? I suppose that is up to the individual, but it is definitely something to be aware of when ordering a “free” credit report (just read the fine print – as always).

The Real “Free” Credit Report

Now then, there is a way to get a truly free credit report with no strings attached each and every year. Here’s a link to the FTC’s website with more information.

The Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer reporting companies – Equifax, Experian, and TransUnion – to provide you with a free copy of your credit report, at your request, once every 12 months. The FCRA promotes the accuracy and privacy of information in the files of the nation’s consumer reporting companies. The Federal Trade Commission (FTC), the nation’s consumer protection agency, enforces the FCRA with respect to consumer reporting companies.

A credit report includes information on where you live, how you pay your bills, and whether you’ve been sued, arrested, or filed for bankruptcy. Nationwide consumer reporting companies sell the information in your report to creditors, insurers, employers, and other businesses that use it to evaluate your applications for credit, insurance, employment, or renting a home.

Hat tip to Todd

Rates have recently jumped up some, reaching their highest levels in the past several years.  With many people having ARMs (adjustable-rate mortgages), there are many with good reason to refinance into a fixed rate program or something similar before rate adjustments take place.

Typically, an ARM will adjust by 1% maximum in a single year, with a 6% adjustment cap on the life of the loan, however ARMs vary greatly so if you have an ARM you’ll want to look at the details of your particular mortgage.

On a positive note, rates are still relatively low (mid 6 range to high 6 APR for conforming 30 yr fixed) compared to oh, the 1980′s when rates were in the teens and even twenties.

Many mortgage shoppers want to know two things:  how much are fees and what is the rate?  While both are important questions, answers to these questions given by mortgage professionals who don’t know your unique situation are rarely reliable.

Every true mortgage professional knows that it is impossible to quote an interest rate and loan terms to a borrower of whom little is known.  At best, any offered information is a guess.

So, if you call a mortgage company and demand a rate quote before divulging any information about your current situation, please understand that the best you are getting is a generic rate for some loan program that you may or may not qualify for (of which there are literally thousands).  And, when it comes time to lock in your interest rate and loan program don’t be surprised if your options differ from what you were originally quoted.

In order to provide a more accurate quote to your unique situation, a mortgage professional would need to first know about your employment, income, credit history, and financial situation.  Other things like your property type and intentions can also play a factor in what terms you can expect.

The moral of this post is that an wise borrower will find it in their best interests to fully inform their loan officer, so that more accurate financing options can be given to the borrower to make an informed decision.  Without a clear picture of the borrower’s unique situation, various rate quotes by competing mortgage brokers will mean very little when it comes time to close on the loan.

Since I am a food lover, I figure it would only be fitting to post some comments on this site about various finds in Salt Lake or along the Wasatch Front.  While I’ve tried a few new places recently, I wanted to give a nod to Moochie’s for their fantastic meatball and cheesesteak sandwiches.

I just finished eating there for the first time, and I will definitely be going back.  My first impression of the meatball was that it ranks top 2 of anywhere I’ve tried here in Salt Lake.  It may be number 1… I haven’t decided that yet.  I also tried the cheesesteak, and it is definitely the best I’ve had in Utah and it leaves all competition in the dust.

This little place on about 230 E 800 S, inside of Circle Pottery, has a larger menu than I was expecting and if other items are half as good as the two types of sandwich I’ve tried so far then I’ll be experimenting for some time to come.

I highly recommend Moochie’s!

It seems to be the case, at least for non-profit Habitat for Humanity, that rising land prices in the Saint George area have pretty much stopped new Habitat homes from being built. Check out this article from KSL.

It’s hard for me to believe that there is no available land anywhere around Saint George for less than $150,000 a lot, but if that is the case then it’s pretty remarkable that demand down there is so high. Perhaps there is room for a big developer to purchase land a bit further away from the hot spots and build some less expensive housing. It certainly sounds like it.

It will be interesting to see if Washington County median home prices topple approved FHA maximum loan limits, effectively nullifying FHA availability down there. That would be a major blow to the lower-middle class around Saint George as far as home ownership goes – especially for first time home buyers. FHA is not really an option (unless limits have been drastically increased lately) in the higher priced areas like California, Arizona, and Las Vegas. Hopefully St George doesn’t join that group.

Elsewhere in Utah the mortgage situation seems to be unaffected by the drastic increase in home values over the last year or so. FHA already increased it’s limits to around $225,000 along most of the Wasatch Front. So for the most part, getting a mortgage loan in Utah shouldn’t be too difficult for most people.

Although it’s only the 2nd, I wanted to post a quick holiday greeting because who knows if I’ll be around again this week.  So… have a great Independence Day to all my neighbors in Utah, everyone in the U.S., and to all the soldiers serving in Iraq and Afghanistan!

Before leaving for a quick getaway last Friday, I had a feeling that my car was due for some trouble. Turns out the feeling was justified this time because my vehicle broke down just outside of Brigham City, on my way home from a weekend of fun.

Being a Sunday, none of the local repair shops were open and tow rates were a healthy $3 a mile (plus a $50 hookup fee). Since Brigham is about 50 miles from Salt Lake, that would have made my tow bill $350 (assuming they bill you for the round-trip miles) to tow the car to a shop near my house.

So I decided to have the car towed to a shop in Brigham and crashed in the Howard Johnson off 1200 South, which turned out to be much less expensive than towing back to SLC.

Everyone I met in Brigham was friendly and genuine, which I thought was noteworthy enough to post about. There’s even a taxi service that will take you anywhere you need to go in town for only $5.

Interest rate movements are about as well understood as some of the decisions made by Utah Jazz management.  Most of us can only scratch our heads and wonder why things happen the way they do.  However, that doesn’t mean a quick analysis of change won’t yield some beneficial insight.

What do higher interest rates mean to you?  The question obviously has many follow-up questions that must be answered before any true analysis can take place.

Are you currently looking to buy a home (but without a locked-rate)?

If you own a home, is your mortgage fixed or variable?  Are your payments going to increase in the next three to six months?

Are you planning on selling your home and buying or building a new one?

In an attempt to provide information that is useful in answering each question and similar variants, I want to outline my thoughts sort of like painting a broad picture from which inferences can be taken.

So first of all, higher interest rates immediately translate into higher monthly payments when all else is equal.  Pretty basic – something everybody knows.   However, all else is usually not equal.  If you’re on a variable interest rate, your payments may not adjust for several months, or perhaps they won’t adjust for a couple of years.  You would be wise to find out when your payment might adjust and what it will likely be adjusting to.  You can find out by calling the lender where you send your monthly payments or by visiting their website (in most cases).

If you’re shopping for a home, you might want to lock-in your interest rate soon and avoid any additional upward movements in the rate.  A small move upward can dramatically affect your maximum loan amount, which is dependent on your debt-to-income ratio.  Higher payments mean a higher debt-to-income ratio, which means less purchasing power for you.

Less purchasing power brings us to the point I wish to make next.  It is possible, though it’s only happened once or twice in America’s history, that real estate median prices could fall if interest rates spike up and are sustained for a couple of years or more.  Falling home values can have a major impact on you if you need to refinance out of an adjustable rate mortgage into a fixed rate mortgage or if you need to consolidate some debt.  You’re able to do less when you have less equity in your house.

While it’s fairly reasonable to say that nobody knows when interest rates are going to go up or down or what they’ll do next, it is possible to have a plan of attack once they do make a move.  Right now rates are on the rise and if you’re smart you’ll assess your mortgage situation and act accordingly.

I recently posted about the IRS rescinding tax-exempt status from several non-profits acting as down-payment-assistance (DPA) charities, and how this would hurt buyers with low down payment money and some bumps in their credit.  Well, there’s still at least one DPA organization that is conducting business as usual, with full endorsement from the IRS and the FHA.

Buyers Fund is actually based in Utah – Provo to be exact.  They have issued a news release confirming their status as non-profit, with a link to the IRS website where you can lookup their charitable status on your own, if you like.  I did the search and sure enough, there they were.

(As a sidenote, you can look up the status of any organization that claims to be a charity on that page.  Might come in handy the next time you want to donate to a disaster relief fund of some kind.)

So what this means is that Borrowers who qualify for FHA loans are still able to also qualify for a 3% down-payment-assistance grant from Buyers Fund, making it easier to purchase a home.  FHA is a great program for many borrowers because it allows for dings in credit, has low down-payment requirements, and much better rates than subprime mortgages.  And believe it or not, FHA is one governmental organization that is completely self-funded and has been for many years.