MORTGAGES: FUNDAMENTALS, ISSUES AND PERSPECTIVES MORTGAGES: FUNDAMENTALS, ISSUES AND PERSPECTIVES HANK C SENTOWSKI EDITOR Nova Science Publishers, Inc New York Copyright © 2007 by Nova Science Publishers, Inc All rights reserved No part of this book may be reproduced, stored in a retrieval system or transmitted in any form or by any means: electronic, electrostatic, magnetic, tape, mechanical photocopying, recording or otherwise without the written permission of the Publisher For permission to use material from this book please contact us: Telephone 631-231-7269; Fax 631-231-8175 Web Site: http://www.novapublishers.com NOTICE TO THE READER The Publisher has taken reasonable care in the preparation of this book, but makes no expressed or implied warranty of any kind and assumes no responsibility for any errors or omissions No liability is assumed for incidental or consequential damages in connection with or arising out of information contained in this book The Publisher shall not be liable for any special, consequential, or exemplary damages resulting, in whole or in part, from the readers’ use of, or reliance upon, this material Independent verification should be sought for any data, advice or recommendations contained in this book In addition, no responsibility is assumed by the publisher for any injury and/or damage to persons or property arising from any methods, products, instructions, ideas or otherwise contained in this publication This publication is designed to provide accurate and authoritative information with regard to the subject matter covered herein It is sold with the clear understanding that the Publisher is not engaged in rendering legal or any other professional services If legal or any other expert assistance is required, the services of a competent person should be sought FROM A DECLARATION OF PARTICIPANTS JOINTLY ADOPTED BY A COMMITTEE OF THE AMERICAN BAR ASSOCIATION AND A COMMITTEE OF PUBLISHERS Library of Congress Cataloging-in-Publication Data Mortgages : fundamentals, issues and perspectives / Hank C Sentowski (editors) p cm Includes index ISBN-13: 978-1-60692-603-1 Mortgages United States Mortgage loans United States I Sentowski, Hank C HG2040.5.U5M67 2008 332.7'20973 dc22 2007031837 Published by Nova Science Publishers, Inc New York CONTENTS Preface Chapter vii Title Insurance (Actions Needed to Improve Oversight of the Title Industry and Better Protect Consumers) United States Government Accountability Office Chapter Reverse Mortgages: Background and Issues Bruce E Foote 49 Chapter One Hundred Questions and Answers about Buying a New Home United States Department of Housing and Urban Development 71 Chapter Alternative Mortgages: Risks to Consumers and Lenders in the Current Housing Cycle Edward Vincent Murphy 95 Chapter Consumer Handbook on Adjustable-Rate Mortgages Federal Reserve Board 117 Chapter A Consumer's Guide to Mortgage Settlement Costs Federal Reserve Board 139 Chapter A Consumer's Guide to Mortgage Lock-Ins Federal Reserve Board 151 Glossary 157 Index 165 PREFACE As of this writing, the complete mortgage industry coast to coast and all of its support services (appraisers, credit agencies, title companies, realtors, mortgage brokers, lenders, attorneys and settlement agents) find themselves in the midst of an unprecedented mortgaging industry meltdown If you are looking to purchase or refinance a home for the first time or have not applied for a mortgage since perhaps you purchased your original home, possibly some 20+ years ago, you can be in for an exhaustive, frustrating and 2-3 month gut-wrenching ride of your life Because of the many advances in banking technology today, coupled with the sometimes unintended and impersonal lack of customer service given to mortgage applicants’ needs, concerns, and general thirst to understand the mortgaging process, this book is an excellent primer for everyone and a must read cover to cover Mortgages will guide you through the complete process of understanding the array of mortgage products available, such as (fixed vs adjustable), (interest only vs negative amortization), (combo and piggy back type mortgages) and the differences between a conforming mortgage loan amount vs a jumbo mortgage It will explain how lenders handle their lock-in interest rate time frames and its costs and then eventually take you through the complete funds necessary for settlement costs (closing costs) After you have read and digested the material, you must always keep in mind that while each bank or lender of mortgages subscribes to a general uniform code of underwriting and lending standards, there are exceptions to the rule Every lender in any particular state has its nuances when it comes to items such as rate locking, products of availability, rates of interest, settlement costs expenses and, yes, even the relaxation of underwriting guidelines I encourage you to read Mortgages thoroughly, then write down all of your questions and concerns in order that you can engage and challenge your loan originator for clarity and answers to each and every one of your mortgaging questions – from the initial application interview through and up to the settlement date (closing day) Still, you and only you must take the personal responsibility to understand the mortgage products being offered to you, to understand your financial capabilities and to possess the economic maturity to enter into what will be the largest purchase of a lifetime viii Hank C Sentowski Now, with your newfound knowledge and with all sincerity, I wish you the best of speed and good luck in your pursuit of the American Dream of home ownership H.C Sentowski The Journey Now Begins In: Mortgages: Fundamentals, Issues and Perspectives ISBN: 978-1-60021-918-4 Editor: Hank C Sentowski, pp 1-48 © 2007 Nova Science Publishers, Inc Chapter TITLE INSURANCE (ACTIONS NEEDED TO IMPROVE OVERSIGHT OF THE TITLE INDUSTRY AND BETTER PROTECT CONSUMERS) United States Government Accountability Office WHY THIS STUDY WAS DONE In a previous report and testimony, GAO identified issues related to title insurance markets, including questions about the extent to which premium rates reflect underlying costs, oversight of title agent practices, and the implications of recent state and federal investigations This report addresses those issues by examining (1) the characteristics of title insurance markets across states, (2) factors influencing competition and prices within those markets, and (3) the current regulatory environment and planned regulatory changes To conduct this review, GAO analyzed available industry data and studies, and interviewed industry and regulatory officials in a sample of six states selected on the basis of differences in size, industry practices, regulatory environments, and number of investigations WHAT IS RECOMMENDED GAO recommends that HUD and state insurance regulators take actions to improve consumers’ ability to comparison shop for title insurance and strengthen the regulation and oversight of the title insurance market, including the collection of data on title agents’ operations Further, Congress may want to consider, as part of its oversight of HUD, exploring the need for modifications to RESPA, including increasing HUD’s enforcement authority HUD generally agreed with these recommendations, and NAIC agreed they should be explored GLOSSARY # 203(b): FHA program which provides mortgage insurance to protect lenders from default; used to finance the purchase of new or existing one- to four family housing; characterized by low down payment, flexible qualifying guidelines, limited fees, and a limit on maximum loan amount 203(k): this FHA mortgage insurance program enables homebuyers to finance both the purchase of a house and the cost of its rehabilitation through a single mortgage loan A Amenity: a feature of the home or property that serves as a benefit to the buyer but that is not necessary to its use; may be natural (like location, Woods, water) or man-made (like a swimming pool or garden) Amortization: repayment of a mortgage loan through monthly installments of principal and interest; the monthly payment amount is based on a schedule that will allow you to own your home at the end of a specific time period (for example, 15 or 30 years) Annual Percentage Rate (APR): calculated by using a standard formula, the APR shows the cost of a loan; expressed as a yearly interest rate, it includes the interest, points, mortgage insurance, and other fees associated with the loan Application: the first step in the official loan approval process; this form is used to record important information about the potential borrower necessary to the underwriting process Appraisal: a document that gives an estimate of a property's fair market value; an appraisal is generally required by a lender before loan approval to ensure that the mortgage loan amount is not more than the value of the property Appraiser: a qualified individual who uses his or her experience and knowledge to prepare the appraisal estimate ARM: Adjustable Rate Mortgage; a mortgage loan subject to changes in interest rates; when rates change, ARM monthly payments increase or decrease at intervals determined by the lender; the Change in monthly -payment amount, however, is usually subject to a Cap Assessor: a government official who is responsible for determining the value of a property for the purpose of taxation 158 Glosary Assumable mortgage: a mortgage that can be transferred from a seller to a buyer; once the loan is assumed by the buyer the seller is no longer responsible for repaying it; there may be a fee and/or a credit package involved in the transfer of an assumable mortgage B Balloon Mortgage: a mortgage that typically offers low rates for an initial period of time (usually 5, 7, or 10) years; after that time period elapses, the balance is due or is refinanced by the borrower Bankruptcy: a federal law Whereby a person's assets are turned over to a trustee and used to pay off outstanding debts; this usually occurs when someone owes more than they have the ability to repay Borrower: a person who has been approved to receive a loan and is then obligated to repay it and any additional fees according to the loan terms Building code: based on agreed upon safety standards within a specific area, a building code is a regulation that determines the design, construction, and materials used in building Budget: a detailed record of all income earned and spent during a specific period of time C Cap: a limit, such as that placed on an adjustable rate mortgage, on how much a monthly payment or interest rate can increase or decrease Cash reserves: a cash amount sometimes required to be held in reserve in addition to the down payment and closing costs; the amount is determined by the lender Certificate of title: a document provided by a qualified source (such as a title company) that shows the property legally belongs to the current owner; before the title is transferred at closing, it should be clear and free of all liens or other claims Closing: also known as settlement, this is the time at which the property is formally sold and transferred from the seller to the buyer; it is at this time that the borrower takes on the loan obligation, pays all closing costs, and receives title from the seller Closing costs: customary costs above and beyond the sale price of the property that must be paid to cover the transfer of ownership at closing; these costs generally vary by geographic location and are typically detailed to the borrower after submission of a loan application Commission: an amount, usually a percentage of the property sales price, that is collected by a real estate professional as a fee for negotiating the transaction Condominium: a form of ownership in which individuals purchase and own a unit of housing in a multi-unit complex; the owner also shares financial responsibility for common areas Conventional loan: a private sector loan, one that is not guaranteed or insured by the U.S government Glossary 159 Cooperative (Co-op): residents purchase stock in a cooperative corporation that owns a structure; each stockholder is then entitled to live in a specific unit of the structure and is responsible for paying a portion of the loan Credit history: history of an individual's debt payment; lenders use this information to gauge a potential borrower's ability to repay a loan Credit report: a record that lists all past and present debts and the timeliness of their repayment; it documents an individual's credit history Credit bureau score: a number representing the possibility a borrower may default; it is based upon credit history and is used to determine ability to qualify for a mortgage loan D Debt-to-income ratio: a comparison of gross income to housing and non-housing expenses; With the FHA, the-monthly mortgage payment should be no more than 29% of monthly gross income (before taxes) and the mortgage payment combined with non-housing debts should not exceed 41% of income Deed: the document that transfers ownership of a property Deed-in-lieu: to avoid foreclosure ("in lieu" of foreclosure), a deed is given to the lender to fulfill the obligation to repay the debt; this process doesn't allow the borrower to remain in the house but helps avoid the costs, time, and effort associated with foreclosure Default: the inability to pay monthly mortgage payments in a timely manner or to otherwise meet the mortgage terms Delinquency: failure of a borrower to make timely mortgage payments under a loan agreement Discount point: normally paid at closing and generally calculated to be equivalent to 1% of the total loan amount, discount points are paid to reduce the interest rate on a loan Down payment: the portion of a home's purchase price that is paid in cash and is not part of the mortgage loan E Earnest money: money put down by a potential buyer to show that he or she is serious about purchasing the home; it becomes part of the down payment if the offer is accepted, is returned if the offer is rejected, or is forfeited if the buyer pulls out of the deal EEM: Energy Efficient Mortgage; an FHA program that helps homebuyers save money on utility bills by enabling them to finance the cost of adding energy efficiency features to a new or existing home as part of the home purchase Equity: an owner's financial interest in a property; calculated by subtracting the amount still owed on the mortgage loon(s)from the fair market value of the property Escrow account: a separate account into which the lender puts a portion of each monthly mortgage payment; an escrow account provides the funds needed for such expenses as property taxes, homeowners insurance, mortgage insurance, etc 160 Glosary F Fair Housing Act: a law that prohibits discrimination in all facets of the homebuying process on the basis of race, color, national origin, religion, sex, familial status, or disability Fair market value: the hypothetical price that a willing buyer and seller will agree upon when they are acting freely, carefully, and with complete knowledge of the situation Fannie Mae: Federal National Mortgage Association (FNMA); a federally-chartered enterprise owned by private stockholders that purchases residential mortgages and converts them into securities for sale to investors; by purchasing mortgages, Fannie Mae supplies funds that lenders may loan to potential homebuyers FHA: Federal Housing Administration; established in 1934 to advance homeownership opportunities for all Americans; assists homebuyers by providing mortgage insurance to lenders to cover most losses that may occur when a borrower defaults; this encourages lenders to make loans to borrowers who might not qualify for conventional mortgages Fixed-rate mortgage: a mortgage with payments that remain the same throughout the life of the loan because the interest rate and other terms are fixed and not change Flood insurance: insurance that protects homeowners against losses from a flood; if a home is located in a flood plain, the lender will require flood insurance before approving a loan Foreclosure: a legal process in which mortgaged property is sold to pay the loan of the defaulting borrower Freddie Mac: Federal Home Loan Mortgage Corporation (FHLM); a federally-chartered corporation that purchases residential mortgages, securitizes them, and sells them to investors; this provides lenders With funds for new homebuyers G Ginnie Mae: Government National Mortgage Association (GNMA); a government-owned corporation overseen by the U.S Department of Housing and Urban Development, Ginnie Mae pools FHA-insured and VA-guaranteed loans to back securities for private investment; as With Fannie Mae and Freddie Mac, the investment income provides funding that may then be lent to eligible borrowers by lenders Good faith estimate: an estimate of all closing fees including pre-paid and escrow items as well as lender charges; must be given to the borrower within three days after submission of a loan application H HELP: Homebuyer Education Learning Program; an educational program from the FHA that counsels people about the homebuying process; HELP covers topics like budgeting, finding a home, getting a loan, and home maintenance; in most cases, completion of the program may entitle the homebuyer to a reduced initial FHA mortgage insurance premium-from 2.25% to 1.75% of the home purchase price Glossary 161 Home inspection: an examination of the structure and mechanical systems to determine a home's safety; makes the potential homebuyer aware of any repairs that may be needed Home warranty: offers protection for mechanical systems and attached appliances against unexpected repairs not covered by homeowner's insurance; ,overage extends over a specific time period and does not cover the home's structure Homeowner's insurance: an insurance policy that combines protection against damage to a dwelling and Is contents with protection against claims of negligence )r inappropriate action that result in someone's injury or )property damage Housing counseling agency: provides counseling and assistance to individuals on a variety of issues, including loan default, fair housing, and homebuying HUD: the U.S Department of Housing and Urban Development; established in 1965, HUD works to create a decent home and suitable living environment for all Americans; it does this by addressing housing needs, improving and developing American communities, and enforcing fair housing laws HUD1 Statement: also known as the "settlement sheet," it itemizes all closing costs; must be given to the borrower at or before closing HVAC: Heating, Ventilation and Air Conditioning; a home's heating and cooling system I Index: a measurement used by lenders to determine changes to the Interest rate charged on an adjustable rate mortgage Inflation: the number of dollars in circulation exceeds the amount of goods and services available for purchase; inflation results in a decrease in the dollar's value Interest: a fee charged for the use of money Interest rate: the amount of interest charged on a monthly loan payment; usually expressed as a percentage Insurance: protection against a specific loss over a period of time that is secured by the payment of a regularly scheduled premium J Judgment: a legal decision; when requiring debt repayment, a judgment may include a property lien that secures the creditor's claim by providing a collateral source L Lease purchase: assists low- to moderate-income homebuyers in purchasing a home by allowing them to lease a home with an option to buy; the rent payment is made up of the monthly rental payment plus an additional amount that is credited to an account for use as a down payment Lien: a legal claim against property that must be satisfied When the property is sold 162 Glosary Loan: money borrowed that is usually repaid with interest Loan fraud: purposely giving incorrect information on a loan application in order to better qualify for a loan; may result in civil liability or criminal penalties Loan-to-value (LTV) ratio: a percentage calculated by dividing the amount borrowed by the price or appraised value of the home to be purchased; the higher the LTV, the less cash a borrower is required to pay as down payment Lock-in: since interest rates can change frequently, many lenders offer an interest rate lock-in that guarantees a specific interest rate if the loan is closed within a specific time Loss mitigation: a process to avoid foreclosure; the lender tries to help a borrower who has been unable to make loan payments and is in danger of defaulting on his or her loan M Margin: an amount the lender adds to an index to determine the interest rate on an adjustable rate mortgage Mortgage: a lien on the property that secures the Promise to repay a loan Mortgage banker: a company that originates loans and resells them to secondary mortgage lenders like :Fannie Mae or Freddie Mac Mortgage broker: a firm that originates and processes loans for a number of lenders Mortgage insurance: a policy that protects lenders against some or most of the losses that can occur when a borrower defaults on a mortgage loan; mortgage insurance is required primarily for borrowers with a down payment of less than 20% of the home's purchase price Mortgage insurance premium (MIP): a monthly payment -usually part of the mortgage payment - paid by a borrower for mortgage insurance Mortgage Modification: a loss mitigation option that allows a borrower to refinance and/or extend the term of the mortgage loan and thus reduce the monthly payments O Offer: indication by a potential buyer of a willingness to purchase a home at a specific price; generally put forth in writing Origination: the process of preparing, submitting, and evaluating a loan application; generally includes a credit check, verification of employment, and a property appraisal Origination fee: the charge for originating a loan; is usually calculated in the form of points and paid at closing P Partial Claim: a loss mitigation option offered by the FHA that allows a borrower, with help from a lender, to get an interest-free loan from HUD to bring their mortgage payments up to date Glossary 163 PITI: Principal, Interest, Taxes, and Insurance - the four elements of a monthly mortgage payment; payments of principal and interest go directly towards repaying the loan while the portion that covers taxes and insurance (homeowner's and mortgage, if applicable) goes into an escrow account to cover the fees when they are due PMI: Private Mortgage Insurance; privately-owned companies that offer standard and special affordable mortgage insurance programs for qualified borrowers with down payments of less than 20% of a purchase price Pre-approve: lender commits to lend to a potential borrower; commitment remains as long as the borrower still meets the qualification requirements at the time of purchase Pre-foreclosure sale: allows a defaulting borrower to sell the mortgaged property to satisfy the loan and avoid foreclosure Pre-qualify: a lender informally determines the maximum amount an individual is eligible to borrow Premium: an amount paid on a regular schedule by a policyholder that maintains insurance coverage Prepayment: payment of the mortgage loan before the scheduled due date; may be Subject to a prepayment penalty Principal: the amount borrowed from a lender; doesn't include interest or additional fees R Radon: a radioactive gas found in some homes that, if occurring in strong enough concentrations, can cause health problems Real estate agent: an individual who is licensed to negotiate and arrange real estate sales; works for a real estate broker REALTOR: a real estate agent or broker who is a member of the NATIONAL ASSOCIATION OF REALTORS, and its local and state associations Refinancing: paying off one loan by obtaining another; refinancing is generally done to secure better loan terms (like a lower interest rate) Rehabilitation mortgage: a mortgage that covers the costs of rehabilitating (repairing or Improving) a property; some rehabilitation mortgages - like the FHA's 203(k) - allow a borrower to roll the costs of rehabilitation and home purchase into one mortgage loan RESPA: Real Estate Settlement Procedures Act; a law protecting consumers from abuses during the residential real estate purchase and loan process by requiring lenders to disclose all settlement costs, practices, and relationships S Settlement: another name for closing Special Forbearance: a loss mitigation option where the lender arranges a revised repayment plan for the borrower that may include a temporary reduction or suspension of monthly loan payments 164 Glosary Subordinate: to place in a rank of lesser importance or to make one claim secondary to another Survey: a property diagram that indicates legal boundaries, easements, encroachments, rights of way, improvement locations, etc Sweat equity: using labor to build or improve a property as part of the down payment T Title 1: an FHA-insured loan that allows a borrower to make non-luxury improvements (like renovations or repairs) to their home; Title I loans less than $7,500 don't require a property lien Title insurance: insurance that protects the lender against any claims that arise from arguments about ownership of the property; also available for homebuyers Title search: a check of public records to be sure that the seller is the recognized owner of the real estate and that there are no unsettled liens or other claims against the property Truth-in-Lending: a federal law obligating a lender to give full written disclosure of all fees, terms, and conditions associated with the loan initial period and then adjusts to another rate that lasts for the term of the loan U Underwriting: the process of analyzing a loan application to determine the amount of risk involved in making the loan; it includes a review of the potential borrower's credit history and a judgment of the property value V VA: Department of Veterans Affairs: a federal agency which guarantees loans made to veterans; similar to mortgage insurance, a loan guarantee protects lenders against loss that may result from a borrower default INDEX A ABA, 2, 4, 6, 9, 20, 24, 25, 33, 36, 41, 46, 47 abatement, 76 academics, 50 access, 7, 8, 13, 19, 33, 37, 46, 73, 84 accessibility, accidents, 68 accountability, 25 accuracy, 82 adjustment, 8, 23, 121, 123, 124, 125, 126, 129, 132, 135, 136, 137 advertisements, 133 advertising, 21, 44, 45, 118 affiliated business arrangement, age, 50, 52, 54, 57, 58, 61, 62, 64, 65, 66, 70, 76, 83 agent, 1, 2, 5, 7, 8, 9, 11, 12, 14, 15, 17, 19, 20, 22, 24, 25, 28, 29, 31, 32, 33, 36, 38, 39, 40, 43, 45, 46, 47, 48, 72, 73, 74, 75, 76, 77, 82, 84, 86, 88, 91, 120, 139, 142, 143, 145, 154, 163 aging, 61, 68 Alaska, 22, 47 ALTA, 2, 4, 14, 43, 45, 48 alternative, 30, 38, 42, 91, 95, 96, 98, 99, 100, 101, 102, 104, 105, 109, 111, 113, 114 alternatives, 6, 70, 99 ambiguity, 39 American Land Title Association, 2, 4, 43 amortization, 95, 96, 98, 99, 100, 113, 118, 120, 121, 126, 128, 129, 130, 131, 133, 135, 136 annual rate, 55, 136, 146 appendix, 42 appraisals, 147 appraised value, 56, 78, 141, 162 Arizona, 58 armed forces, 93 asbestos, 76 assessment, 34 assets, 24, 51, 64, 85, 158 assignment, 56 auditing, 4, 44 authority, 1, 2, 6, 7, 9, 30, 34, 36, 37, 38, 39, 40, 41, 65, 82, 156 automation, 88 availability, 49, 55, 67, 109 awareness, 42 B balance sheet, 44, 154 banking, 4, 41, 43, 96, 98, 99, 109 bankruptcy, 89 banks, 21, 46, 95, 97, 120 behavior, 43 bonding, 32 bonds, 102 borrowers, 7, 40, 49, 50, 52, 53, 55, 56, 57, 60, 61, 62, 64, 65, 66, 67, 78, 80, 84, 85, 87, 91, 92, 95, 96, 98, 99, 100, 101, 102, 103, 105, 108, 109, 110, 111, 113, 114, 118, 153, 160, 162, 163 borrowing, 51, 61, 109, 136, 141 business costs, 16 business cycle, buyer, 6, 7, 8, 14, 17, 39, 40, 41, 51, 77, 90, 91, 97, 98, 100, 103, 105, 111, 139, 143, 144, 145, 157, 158, 159, 160, 162 C California, 3, 9, 11, 14, 15, 17, 18, 21, 26, 27, 29, 31, 32, 33, 34, 38, 42, 43, 45, 46, 47, 48, 53, 55, 58, 68, 70, 96, 111 candidates, 61 cash flow, 101 causation, 113 166 Index Census, 69 certificate, 57 certification, 145 children, 51, 64, 76, 83, 101 circulation, 161 classes, 21 clients, 45 codes, 77 collateral, 54, 56, 64, 65, 97, 99, 102, 114, 161 commerce, 73 communication, 36, 48 community, 73, 88 compensation, 2, 20, 22, 24, 36, 88, 137 competency, 34 competition, 1, 2, 3, 5, 17, 19, 20, 22, 24, 25, 29, 31, 37, 38, 39, 42, 144 competitor, 30, 47 complexity, 19 compliance, 33 components, 16, 33 composition, 103 concentration, 95, 96, 100, 111, 113 conflict, 24 conflict of interest, 24 Congress, 1, 6, 40, 41, 47, 66, 67, 109 Connecticut, 58 construction, 75, 153, 158 consumer protection, 7, 42, 48, 98, 99 consumers, 1, 2, 3, 4, 5, 6, 9, 14, 16, 17, 18, 19, 20, 21, 22, 23, 25, 26, 28, 29, 30, 31, 35, 36, 37, 38, 39, 40, 41, 43, 44, 47, 55, 62, 87, 95, 96, 99, 100, 109, 113, 114, 163 control, 10, 25 conversion, 49, 50, 51, 56, 57, 64, 129, 132, 135 cooling, 161 correlation, 113, 115 cost saving, 25, 38 costs, 1, 2, 3, 5, 6, 8, 10, 12, 15, 16, 17, 25, 26, 28, 29, 30, 31, 32, 33, 38, 39, 40, 41, 42, 43, 44, 47, 51, 58, 61, 62, 67, 71, 72, 77, 78, 79, 80, 84, 86, 88, 89, 90, 95, 97, 102, 104, 109, 111, 131, 133, 137, 139, 140, 141, 143, 144, 145, 146, 147, 149, 153, 158, 159, 161, 163 counsel, 37 counseling, 56, 57, 84, 90, 91, 93, 161 couples, 63 coverage, 7, 8, 12, 29, 30, 62, 77, 142, 144, 163 covering, 113, 131 credit, 55, 56, 57, 58, 59, 60, 61, 63, 70, 72, 80, 82, 83, 84, 85, 87, 88, 89, 90, 97, 100, 104, 105, 120, 123, 133, 134, 139, 140, 145, 147, 152, 154, 158, 159, 162, 164 credit rating, 139 creditors, 154 current limit, 59, 87 customers, 19, 20, 29, 32, 62, 84 D daily living, 67 danger, 162 data collection, 33 database, 73, 84 death, 52, 56, 67 deaths, 144 debt, 49, 50, 54, 57, 61, 62, 64, 67, 70, 72, 78, 80, 83, 88, 90, 98, 102, 131, 159, 161 debts, 71, 72, 81, 82, 85, 89, 120, 154, 158, 159 decisions, vii, 19, 149 deduction, 140 defects, 7, 25 delinquency, 96 delivery, 40 demand, 9, 153 demographics, 62 Department of Commerce, 47 Department of Health and Human Services, 69 Department of Housing and Urban Development, 2, 3, 4, 43, 47, 55, 69, 73, 86, 133, 160, 161 Department of Justice, 47 deposits, 12 desire, 28 disability, 73, 84, 160 disaster, 93 disbursement, 14 disclosure, 24, 34, 38, 96, 99, 164 discount rate, 109, 129 discrimination, 73, 160 displacement, 56 disposition, 36 distribution, 42, 114 District of Columbia, 14, 16, 45, 48, 58 division, 47 divorce, doors, 75 draft, 6, 41 duration, 98 E earnings, 34, 36 economic indicator, 136 education, 31, 32, 41, 42, 87 Education, 91, 160 elderly, 49, 50, 51, 55, 56, 58, 61, 62, 63, 64, 67, 68 Index employees, 7, 24, 36, 44 employment, 154, 162 energy, 74, 92, 159 energy efficiency, 92, 159 environment, 1, 3, 42, 43, 95, 109, 113 equipment, 31 equity, 26, 27, 44, 49, 50, 51, 52, 56, 57, 58, 61, 63, 64, 67, 70, 72, 78, 80, 89, 103, 104, 105, 109, 131, 135, 141, 142, 164 estate planning, 64 evolution, 50 examinations, 4, 8, 9, 14, 15, 22, 33, 38, 46, 48 expertise, 19 exposure, 9, 76, 111, 112, 114 F failure, 17, 32, 159 Fair Housing Act, 160 faith, 78, 146, 160 family, 23, 55, 57, 59, 64, 66, 71, 72, 82, 88, 157 Fannie Mae, 3, 49, 57, 58, 60, 70, 90, 91, 160, 162 fear, 38, 103, 109 federal government, 49 Federal Home Loan and Mortgage Corporation, 3, 4, 44 federal law, 4, 9, 141, 156, 158, 164 Federal National Mortgage Association, 3, 4, 44, 46, 57, 70, 160 Federal Register, 114 Federal Reserve Board, 128, 138 finance, 50, 92, 97, 146, 157, 159 financial institutions, 95, 98, 100, 110 financial markets, 97 financial performance, 26 financial stability, 82 financial system, 95, 96 financing, 77, 92, 97, 149 firms, 51 fixed costs, 10 fixed rate, 97, 99, 101, 102, 109, 114, 118, 135 flexibility, 55, 99, 154 float, 152, 155 flood, 77, 86, 142, 145, 146, 148, 160 flooding, 76 focusing, 33, 74 food, 50, 51 foreclosure, 89, 90, 159, 162, 163 fraud, 32, 35, 84, 162 Freddie Mac, 3, 58, 90, 91, 160, 162 freedom, 72 frustration, 30, 36 fuel, 149 167 funding, 145, 160 funds, 13, 14, 20, 47, 54, 57, 59, 63, 64, 67, 70, 78, 88, 89, 97, 104, 105, 109, 121, 139, 142, 143, 145, 146, 159, 160 furniture, 74, 85 G Georgia, 58 goals, 6, 114 goods and services, 161 government, 4, 8, 30, 38, 44, 66, 67, 145, 157, 158, 160 Government Accountability Office, 99, 114 government intervention, 38 graph, 126, 130 grass, 76 groups, 99 growth, 33, 55, 61, 62, 64, 68, 103, 105, 111 guidance, 45, 48, 95, 96, 98, 99, 100, 113 guidelines, 6, 41, 45, 46, 48, 89, 91, 92, 157 H Hawaii, 58 hazardous materials, 77 health, 51, 62, 64, 67, 76, 105, 141, 163 health care, 51, 64 health problems, 62, 163 heating, 161 hedging, 109 hiring, home value, 58, 59, 60, 64, 65, 66, 82 homeowners, 49, 50, 51, 52, 54, 55, 56, 57, 58, 59, 61, 62, 63, 64, 65, 66, 67, 68, 70, 110, 142, 143, 146, 149, 159, 160 honesty, 38 House, 3, 42, 50, 67, 68, 69, 96, 102, 103, 104, 106, 107, 108, 110, 113 household income, 97, 102, 103, 105 households, 61, 102, 104 housing, 37, 50, 68, 72, 86, 87, 88, 90, 93, 99, 100, 102, 103, 104, 105, 108, 110, 112, 113, 114, 131, 133, 157, 158, 159, 161 HUD, 1, 2, 3, 4, 5, 6, 9, 16, 18, 19, 20, 21, 22, 24, 29, 30, 33, 35, 36, 37, 39, 40, 41, 42, 43, 44, 47, 48, 55, 56, 62, 64, 65, 66, 68, 73, 74, 75, 84, 86, 87, 90, 93, 147, 148, 149, 161, 162 hurricanes, 77 hybrid, 127, 132, 135 168 Index I identification, 38 images, 13 incentives, 21, 46 income, 49, 50, 51, 52, 53, 54, 55, 58, 62, 63, 64, 65, 71, 72, 79, 80, 82, 85, 87, 88, 90, 102, 105, 109, 113, 120, 123, 140, 158, 159, 160, 161 income tax, 85, 123, 140 indication, 22, 111, 112, 162 individual character, 74 individual characteristics, 74 industry, vii, 1, 2, 3, 4, 6, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 21, 22, 24, 25, 26, 29, 30, 32, 33, 34, 37, 38, 39, 40, 41, 42, 43, 45, 46, 47, 62, 99, 100 inflation, 50, 79, 103, 109, 111, 161 information sharing, 37 inspections, 143 inspectors, 153 institutions, 84, 96, 98, 99, 100, 145 instruments, 49, 50, 149 insulation, 75 insurability, 33 insurance, 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 51, 52, 56, 57, 62, 64, 65, 66, 67, 72, 76, 77, 78, 80, 81, 86, 87, 89, 91, 92, 104, 115, 118, 123, 133, 139, 141, 142, 144, 145, 146, 148, 151, 157, 159, 160, 161, 162, 163, 164 integrity, 34 interest rates, 9, 52, 61, 65, 66, 70, 79, 81, 84, 95, 96, 97, 100, 101, 102, 109, 110, 111, 113, 114, 117, 120, 121, 124, 126, 127, 128, 130, 132, 133, 134, 141, 152, 153, 157, 162 Internet, 88, 122, 133 investment, vii, 63, 72, 87, 103, 142, 144, 160 investors, 100, 114, 153, 160 J joint ventures, 46 judgment, 72, 161, 164 jurisdiction, 48 justification, 30 L labor, 8, 13, 89, 105, 107, 164 labor markets, 105 land, 143 language, 99 law enforcement, 35 laws, 3, 5, 12, 16, 30, 32, 33, 34, 35, 37, 38, 42, 43, 45, 48, 77, 86, 161 lawyers, 14 layering, 99, 100 legality, 22, 37 legislation, 35, 67, 99 lending, 35, 39, 77, 83, 84, 96, 99, 109, 143, 145, 146, 149 librarians, 73 licenses, 34, 35 life expectancy, 49, 51, 64, 65, 66 lifetime, 49, 50, 51, 52, 54, 55, 62, 64, 118, 123, 125, 135 likelihood, 62, 113, 154 living environment, 86, 161 loans, 46, 49, 50, 51, 54, 56, 57, 58, 59, 60, 61, 64, 66, 67, 70, 78, 81, 87, 88, 90, 92, 93, 96, 97, 99, 100, 102, 109, 110, 111, 113, 117, 120, 123, 127, 128, 129, 130, 131, 132, 134, 135, 137, 152, 153, 154, 155, 160, 162, 164 local government, 8, 13, 14, 144 location, 12, 24, 72, 100, 142, 143, 157, 158 long-term care insurance, 56, 62, 67 Los Angeles, 59, 104, 108, 111, 112 lower prices, 38 LTC, 62 lying, 77 M major cities, 15 management, 45, 100 mandates, 84, 98 market, 2, 3, 4, 5, 6, 7, 9, 10, 11, 14, 16, 19, 20, 29, 34, 35, 38, 40, 41, 42, 43, 44, 46, 48, 50, 51, 58, 77, 97, 99, 100, 102, 103, 104, 105, 107, 108, 112, 113, 114, 135, 141, 144, 152, 153, 157, 159, 160 market concentration, market share, 10, 20, 34 market structure, 29 market value, 51, 135, 157, 159, 160 marketing, 2, 3, 5, 8, 20, 24, 34, 35, 36, 38, 39, 40, 41, 43, 100, 133 markets, 1, 2, 3, 4, 5, 9, 10, 11, 17, 26, 29, 35, 39, 42, 43, 95, 100, 103, 104, 105, 107, 108, 110, 112, 113, 114, 139 Maryland, 39, 58, 70 Massachusetts, 58, 107 measurement, 161 measures, 88, 95 median, 15, 26, 50, 58 Index Medicaid, 61, 63 Medicare, 63 Miami, 104, 108, 111, 112 migration, 105 military, 88 Minnesota, 12, 14, 33, 46, 58 MIP, 56, 162 missions, 86 models, 30, 38 money, 2, 6, 7, 9, 21, 24, 25, 26, 32, 36, 37, 38, 40, 41, 71, 75, 76, 77, 78, 80, 81, 86, 89, 92, 97, 117, 130, 136, 137, 139, 141, 142, 143, 159, 161, 162 mortality, 52 mortality risk, 52 motivation, 19 multiple factors, N NAIC, 1, 3, 6, 24, 31, 38, 41, 42, 43, 44, 45, 48 nation, 13, 68 National Association of Insurance Commissioners, 3, 42, 43 national origin, 160 nationality, 73, 84 natural disasters, 76, 77 Nebraska, 39 negligence, 161 negotiating, 75, 77, 158 negotiation, 78 New Jersey, 58 New Orleans, 104 New York, 3, 11, 13, 14, 21, 27, 31, 32, 35, 42, 53, 58, 104, 108, 111, 112, 114 newspapers, 122 O obligation, 82, 158, 159 observations, 113 oil, 149 older people, 68 online information, 46 organization, 14, 25, 45, 48, 88 organizations, 3, 25, 43, 138 oversight, 1, 2, 5, 6, 32, 34, 38, 40, 41, 44 overtime, 88 ownership, 3, 4, 7, 9, 10, 11, 12, 24, 33, 38, 45, 143, 144, 158, 159, 164 ownership structure, 38 169 P partnerships, 46 penalties, 6, 9, 20, 21, 34, 36, 37, 40, 58, 129, 131, 132, 137, 162 permit, 55, 61, 69, 82 pests, 75 photographs, 75 planning, 6, 83, 95 plants, 4, 7, 13 policy rate, 15, 27 policymakers, 50 pools, 160 poor, 25, 50, 64, 68, 80 portfolio, 109 power, 38, 61, 76 preferential treatment, 24 premiums, 2, 3, 4, 5, 7, 8, 11, 14, 15, 16, 23, 25, 26, 27, 28, 30, 33, 42, 43, 44, 45, 47, 56, 62, 66, 76, 87, 92, 133, 142 pressure, 5, 16, 29, 37, 110 prevention, price competition, 4, 16, 17, 19, 26, 29, 39 price index, 102, 115 prices, 1, 2, 3, 4, 16, 17, 19, 20, 22, 25, 26, 28, 29, 30, 37, 38, 39, 41, 42, 50, 75, 87, 95, 96, 99, 102, 103, 105, 107, 108, 110, 111, 112, 113, 114, 131 private investment, 160 private sector, 158 probability, 112 production, 44, 45 profit, 22, 25, 28 profitability, 33 profits, 3, 20, 25, 26 program, 30, 49, 50, 51, 52, 55, 57, 58, 60, 61, 62, 64, 66, 67, 68, 87, 89, 91, 92, 123, 133, 157, 159, 160 propane, 149 property taxes, 51, 57, 73, 81, 142, 143, 145, 146, 147, 159 purchasing power, 50 Q quality of life, 74 quality of service, 20 R race, 73, 84, 160 radon, 76, 143 range, 52, 99, 107, 142, 143, 144, 147, 148, 149 170 Index rate of return, 51 real estate, 2, 3, 4, 5, 7, 9, 12, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 29, 34, 35, 36, 37, 39, 40, 41, 42, 43, 45, 46, 47, 48, 51, 72, 73, 74, 75, 76, 77, 78, 80, 82, 84, 86, 88, 91, 99, 100, 133, 134, 139, 144, 145, 149, 152, 154, 158, 163, 164 Real Estate Services Providers Council, 3, 12 Real Estate Settlement Procedures Act, 2, 3, 5, 47, 84, 146, 147, 163 Real Estate Settlement Procedures Act (RESPA),, reduction, 29, 90, 92, 105, 109, 163 reforms, 37 regional, 4, 9, 42, 105, 113 Registry, 86 regulation, 1, 6, 9, 30, 31, 34, 35, 41, 42, 62, 158 regulations, 3, 6, 22, 32, 33, 35, 37, 38, 39, 40, 41, 43, 47, 56, 99 regulators, 1, 2, 3, 4, 5, 6, 15, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 33, 34, 35, 36, 37, 38, 40, 41, 43, 44, 45, 46, 48, 98, 99 regulatory oversight, rehabilitation, 87, 92, 93, 157, 163 reinsurance, 5, 21, 22, 23, 37, 46 relationship, 4, 5, 9, 11, 24, 39, 43, 44, 113 relationships, 34, 36, 37, 84, 99, 100, 163 religion, 73, 84, 160 rent, 20, 31, 44, 45, 72, 86, 87, 88, 89, 161 repair, 51, 57, 74 reputation, 25, 32, 82 reserves, 88, 147, 158 resources, 2, 30, 35, 36, 37, 64, 72, 73 RESPA, 1, 2, 3, 5, 6, 7, 9, 18, 20, 22, 23, 24, 30, 34, 35, 36, 37, 38, 39, 40, 41, 47, 48, 84, 146, 163 responsiveness, 30, 36 RESPRO, 3, 12, 25, 43, 46 retirement, 83, 88 retirement pension, 88 returns, 82, 85, 154 revenue, 11, 34 risk, 11, 14, 15, 17, 22, 23, 29, 47, 49, 52, 54, 56, 62, 64, 65, 77, 95, 96, 98, 99, 100, 101, 105, 108, 109, 110, 111, 112, 113, 114, 115, 120, 129, 131, 141, 144, 164 risk management, 98, 100, 113 rural areas, 141 S safety, 75, 76, 98, 158, 161 sales, 2, 8, 17, 18, 34, 40, 41, 43, 46, 48, 51, 55, 56, 63, 65, 73, 82, 95, 134, 139, 158, 163 sample, 1, 4, 15, 20, 21, 26, 27, 28, 29, 30, 31, 33, 34, 35, 44, 46, 47, 101, 110 sanctions, 34, 47 satisfaction, 25, 82 savings, 2, 5, 17, 18, 25, 61, 67, 88, 89, 92, 93, 101, 103, 104, 108, 129 school, 72, 73, 120 search, 3, 4, 5, 7, 8, 12, 13, 14, 15, 16, 17, 23, 25, 28, 29, 30, 33, 43, 44, 45, 72, 83, 144, 146, 148, 164 searches, 2, 4, 7, 8, 9, 13, 14, 15, 38, 46, 144 searching, SEC, 3, 4, 27, 37, 48 securities, 48, 121, 134, 160 Securities and Exchange Commission, 3, 4, 43 Securities and Exchange Commission (SEC), security, 52, 72, 77, 87 self-employed, 154 Senate, 42 series, 22, 147, 148, 149 service provider, 9, 22, 24, 36, 46, 84 settlements, 20, 21, 24, 36, 37, 40, 44, 45, 47, 139 severe stress, 112 severity, 67 sex, 73, 84, 160 shares, 12, 113, 158 sharing, 11, 37, 45, 48, 70 shock, 110, 129, 130 short-term interest rate, 109, 114 sign, 22, 32, 75, 84, 86, 91, 145 signs, 114 skimming, 91 Social Security, 63, 88 society, 68 software, 13 soil, 76 South Dakota, 39 spectrum, 98 speculation, 99 speed, 154 SSI, 63 stability, 72 stages, 145 stakeholders, 6, 30, 38 standards, 4, 44, 47, 96, 98, 99, 102, 158 state laws, 20, 35, 46 state oversight, 42 state regulators, 2, 4, 5, 6, 14, 30, 32, 33, 34, 35, 36, 37, 38, 39, 41, 44 stock, 103, 159 storage, 74 stress, 103, 105 students, 63 subsidization, 5, 26 suffering, 56 summer, 143 Index Sun, 68 supply, 84, 141 support services, 68 survival, 54 survival rate, 54 survivors, 64 sweat, 89 systems, 16, 42, 44, 73, 74, 75, 78, 100, 161 T tax deduction, 79 tax rates, 74, 149 taxation, 63, 157 technology, telephone, 88, 152 tenure, 49, 54, 55 Texas, 3, 11, 12, 13, 15, 21, 27, 29, 31, 32, 35, 38, 42, 43, 46, 69 theory, 38 thinking, 71 time, vii, 3, 7, 8, 13, 17, 36, 39, 42, 44, 49, 54, 55, 57, 74, 75, 77, 78, 79, 80, 81, 83, 84, 87, 88, 90, 97, 98, 100, 101, 103, 104, 105, 109, 110, 111, 117, 120, 121, 122, 124, 126, 127, 128, 129, 130, 132, 135, 139, 140, 141, 142, 144, 145, 151, 152, 153, 154, 155, 157, 158, 159, 161, 162, 163 timing, 145 title insurance, 1, 2, 3, 4, 5, 6, 7, 8, 9, 15, 16, 17, 18, 19, 20, 21, 22, 23, 25, 26, 29, 30, 31, 34, 35, 36, 38, 39, 40, 41, 42, 43, 44, 46, 48, 144 title insurance market, 1, tornadoes, 77 total costs, 38 tourism, 105 trade, 45, 46, 48, 51, 120, 132 trade-off, 51, 120, 132 training, 11, 20, 36 trajectory, 107 transaction costs, 51, 54, 65 transactions, 3, 5, 13, 17, 18, 20, 22, 25, 26, 40, 51, 143 transition, 113 transparency, 39, 41, 42 transportation, 72, 73 trend, 107, 114 171 trust, 16, 72, 158 tuition, 120 U underwriter, 4, 8, 10, 13, 14, 15, 24, 38, 44, 45 unemployment, 88, 105, 107, 108 unemployment rate, 105, 107, 108 unions, 120 United States, 3, 4, 48, 69, 70, 112 updating, 14 urban areas, 93 V validity, 46 values, 5, 16, 66 vandalism, 142 variable, 96, 97 variables, 51 Vermont, 58 veterans, 164 victims, 93 Virginia, 39, 58, 112 vulnerability, 2, 39 W waste disposal, 75, 76 water heater, 75 water quality, 141, 143 web, 93 WHO, 87 wind, 142 windows, 75 worry, 74 writing, 25, 27, 83, 133, 141, 153, 155, 162 wrongdoing, 36 Y yield, 114 .. .MORTGAGES: FUNDAMENTALS, ISSUES AND PERSPECTIVES MORTGAGES: FUNDAMENTALS, ISSUES AND PERSPECTIVES HANK C SENTOWSKI EDITOR Nova Science Publishers,... COMMITTEE OF THE AMERICAN BAR ASSOCIATION AND A COMMITTEE OF PUBLISHERS Library of Congress Cataloging-in-Publication Data Mortgages : fundamentals, issues and perspectives / Hank C Sentowski (editors)... Industry and Better Protect Consumers) United States Government Accountability Office Chapter Reverse Mortgages: Background and Issues Bruce E Foote 49 Chapter One Hundred Questions and Answers