Pinkrose4664

Hi

I know this is really off the wall, but I don't have another forum that has such a large group of helpful people that I may be able to get a question answered.

Thanks

MTS

You mean a real estate lawyer? Or a mortgage broker?
I don't think I've ever heard of a "mortgage lawyer" on the consumer level before.;-)

What's the question?

Pinkrose4664

Hi

Thanks for asking, I guess that is what I need. My question is, a friend of ours Mortgage was bought out by Wells Fargo and when they got their first bill it included an charge per month of $100 for "Hus Risk Based". I was under the impression that when a bank buys out a mortgage that they can not change the money like that. I mean, I know there are things they can change, but they bought the mortgage and accepted the terms. Am I right and if I am, how can our friends get it taken off and get the months that they paid the $ back?

Thanks for any help

MTS

It's late so here are some ramblings. ;-) Sorry it's so disorganized. It's late. ;-)

The line probably reads "HUD Risk Based."

That charge is for mortgage insurance that the buyer pays in order to get an FHA insured loan. That premium is not for the homeowner's benefit, but for the bank/lending institution that made the loan. If the homeowner were to go into foreclosure, the FHA would reimburse the bank if they were to take a loss on the loan.

Now, the main reason for this is because your friends probably have a high LTV ratio. That means loan-to-value, the percentage of the mortgage relative to the home's value.

So this HUD insurance is sort of like PMI (Private Mortgage Insurance) on mortgages that aren't FHA insured. The PMI is usually required on LTV's of 80% or higher.

If you have a $200K mortgage and the house is valued at $300K, the LTV is 66%. Not so bad. Iow, prices would have to drop substantially before the bank's loan is really in danger of losing value - being underwater.

However, if you have a $290K mortgage on the same house, your LTV is 96.7%, and were the house to go into foreclosure, it's very possible the bank would lose money on it's investment, especially in this climate.

Meanwhile, the homeowners in that situation only had to put down 3% (I'm sure you've seen the ads promoting this deal).

In a perfect world, they never should have gotten the loan in the first place because they really can't afford it if all they have to put down is $9K. But the gov't wanted to encourage and make it easier for people to buy houses.

Well, no need to go into how well that all worked out for the country :roll: so don't get me going on that whole debacle.

You mention that you wanted to know how they would get back the prior payments for this charge. Well, they can't.

Cliff notes version: The only reason they got the loan was because the onlyinstitution that would give it to them insisted on them paying the insurance. No mtge insurance, no mortgage.

And if they were being charged this from their previous mortgage service co. (because, really, who really knows who owns the loan today), then it's not a "new" charge.

So I'm not sure I really understand the situation.
They really need to compare the bills from both banks to make sure it wasn't called something else, or included in something else.

Are you sure it's not a refinance - because that's almost like starting from scratch. And if that loan was an FHA loan, which it probably was, then the insurance premium would also apply.

Also, the amount of HUD insurance is, I think, now based on the individual borrowers. It used to be a flat rate for everyone, but now they're tying it to credit worthiness - I don't know if they're using FICO or not.