Down payment assistance programs like The American Dream Down Payment Assistance are all but outlawed for use with any government insured loan programs.
It’s about damn time!
I can hear you now, “What’s wrong with charities helping home buyers by giving down payment assistance?”
In a word, it’s a scam…that’s why!
Mortgage originators tell you your mortgage lock is in force when it is NOT. Lying about your mortgage lock status is a common practice to increase loan revenue or cover loan officer mistakes.
Loan officers are always trying to make the most yield spread revenue on every mortgage. Telling you the mortgage lock is placed but then not actually locking the rate with the wholesale mortgage company allows them to “play the market” with your money.
I’ve compiled a few resources on average mortgage rate data and yield spread premium starting with Congressional testimony from experts and ending with average mortgage rate resources online.
Be sure to read the Harvard Professor Jackson’s testimony if nothing else….
Mortgage yield spread premium is responsible for up to two thirds of the revenue earned on every mortgage. Yet most Americans have no knowledge of mortgage yield spread premium or how to avoid it.
Locating the yield spread premium rip-off is virtually impossible except at closing on the settlement statement known as the HUD1 Settlement Statement. Of course, by then it’s too late!
Other non settlement statement mortgage disclosures specifically the Good Faith Estimate (the mortgage application disclosure) are useless for discovering yield spread premium overcharging since most brokers either never disclose or obfuscate the disclosure as you’ll see below.
Never use a real estate referral from a real estate agent to locate your mortgage company as you may find yourself the victim of a common con game. Real estate referral cons can cost you dearly!
The servicing mortgage company is the company to whom you make your payments. The servicing mortgage banks prey on your erroneous belief you can save time and money refinancing with them.
Refinancing with your current servicing mortgage company gives absolutely no cost or time savings!
But they know, you don’t know that.
The mortgage application deposit scam is a long running scam. The idea is to get your mortgage application and the accompanying deposit at all costs!
Saying or doing virtually anything to get your signature on the mortgage application along with your deposit is the name of the game.
Typical sales “hooks” used in the mortgage application deposit scam:
A Good Faith Estimate is a legally required mortgage document showing costs, rate, and payment. Believing the Good Faith Estimate reflects truthful, accurate, and guaranteed figures is folly.
Nothing could be further from the truth.
The Good Faith Estimate is manipulated by the loan officer low balling the costs and rate morphing it from a mortgage disclosure into a selling tool. It does not reflect real mortgage rates or actual closing costs.
Yield Spread Premium (YSP) is without a doubt the most misunderstood and highly profitable secret the mortgage industry has kept from the American mortgage consumer.
The government’s own number pegs the consumer cost of the yield spread premium deception at $16,000,000,000 a year
…yes that’s billion, with a “b”! My own figures put it into the hundreds of billions of dollars since the government’s numbers were woefully short-sighted.
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