Effecive April, 1, 2011, unless stopped by a filed lawsuit, the Federal Reserve will implement a new way to pay people that originate mortgages who work for any institution. Specifically, it would fix that amount of money they could receive from a lender for giving you zero points but not limiting what they could make by charging you points.
What the Fed has done is say that they will limit the compensation on one side but allow for anarchy on the other. It makes no sense. Why take away America’s most important financing vehicle in the beginning of a recovery?
People may now have to come up with money for points instead of enjoying a slightly higher rate that they can afford and pay no points to get it.
For those that don’t know, points are a way to get a lower mortgage rate. Simple, think see-saw. Higher rate, lower or no points, lower rate, higher points.
Along with the higher cost of mortgages, the prohibited guidelines that the Mortgage Gestapo have been putting into effect, the higher monthly FHA premiums (1.1) that take hold next month, the HVCC-like 150% increase in appraisal costs due to AMCs and the lack of good, independent jumbo rates to move the American McMansion, we can assume any national housing recovery will only take 20 years to come around.
Zero points…..the disaster starts April 1st.