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Q: Loan question! ( Answered 5 out of 5 stars,   3 Comments )
Question  
Subject: Loan question!
Category: Business and Money
Asked by: shoaib-ga
List Price: $2.00
Posted: 10 Oct 2004 10:50 PDT
Expires: 09 Nov 2004 09:50 PST
Question ID: 412853
I  want  to know  that  what  is  the  "difference"  between 
"conforming   and  non-conforming   real  estate  mortgage  loans" ??
Answer  
Subject: Re: Loan question!
Answered By: chris2002micrometer-ga on 10 Oct 2004 18:19 PDT
Rated:5 out of 5 stars
 
This appears to be a euphemism for "sub prime" or "credit risk".

I seached Google with "non-conforming   real  estate  mortgage  loans"
and got this:

Understanding the Mortgage Loan Market - Real Estate Real Estate ...
... regular monthly expenses (including mortgage payments, property
... Non-conforming loans
are also known as ?sub-prime ... Secrets of a Millionaire Real Estate Investor ... 

LINK:http://www.totalrealestatesolutions.com/articles/disp.cfm?aid=226&typeid=1&winpop=0&nav=1

Sub prime lending is profitable for lenders because they charge
higher-than-normal interest and they find a way to secure their money
that is often cruel and predatory. It is considered predatory when
they do not truly expect the loan to be paid off. They bet that you
will have a divorce/job loss/medical emergency/arrest/DUI or some
other "unexpected" expense to disrupt your ability to handle the
payment and foreclose eagerly when you get a week behind.

Request for Answer Clarification by shoaib-ga on 22 Oct 2004 20:21 PDT
Chris2002micrometer-ga  researcher  please  provide  more  detail  of 
the  non-conforming  real  estate  mortgage  loans  so  that  I  shall
 be able  to  know  more  details  about  that  non-conforming  real 
estate  mortgage  loan ?? Thanks  for  that  from  Shoaib.

Clarification of Answer by chris2002micrometer-ga on 23 Oct 2004 15:38 PDT
What does "border on criminal" is predatory lending practices. I
briefly worked for a company that held "mortgages" but had to call
them something else. Make sure you never accept a loan based on the
"Rule of 78" which front-loads most of the financing charges. Worse
yet are the "interest-only" deals that guarantee that you will "rent"
the place for the rest of your life. There is a lot of hype and misuse
of terms in this industry and there can often be more than one
interpretation of a term such as "non-conforming".

There is another definition, from the link suggested by rbt-ga.

http://www.bankrate.com/brm/news/mtg/20001221a.asp?print=on

 One of the most important events for consumers is the annual
adjustment of Fannie Mae and

Freddie Mac loan limits. The two agencies purchase loans from lenders.
But by law, they

can't buy mortgages that exceed a certain dollar amount. Loans that
fit under the cap are

called "conventional" or "conforming" mortgages, while those that
don't are called "jumbo"

loans.

Request for Answer Clarification by shoaib-ga on 24 Oct 2004 18:44 PDT
Chris2002micrometer-ga   researcher  please   note  that  in  the 
above  mentioned  website  it  is written  that  non-conforming  real 
estate  mortgage   loans  have  "no  set  guidelines" and  vary  from 
lender  to  lender  so  therefore
  I  want  to  know  that those financial organizations  or 
institutions  which  provide  "non-conforming  real  estate  mortgage 
loans  and  non-conforming  equity  loans  OR  non-conforming 
collateral  based  loans"   can  pay  for  the  following  "closing 
costs  and for  any  other  costs"  which  are  related  directly  or 
indirectly  with  the  purchase  of  the  property:

Closing Costs 
Various fees and expenses  related  at the time of a real estate
closing, (also termed transaction costs). Includes brokerage
commissions, lender fees, title insurance, recording fees, prepayment
penalty, inspection and appraisal fees, and attorney fees and  the 
cost  of  tax(es), notary  fees  and  "all"  other  costs  directly 
or  indirectly  related  with  the  purchase  of  the  property  so 
as  to totally  complete  the  property  purchase  process.

Please provide  "clarification"  of  that  statement  and  many 
thanks  for  that  help.  After  receiving  your  answer  I shall 
give   *****  rating  to  your  answer.

Clarification of Answer by chris2002micrometer-ga on 24 Oct 2004 20:30 PDT
Dear shoaib-ga

Searching "pay Closing Costs" brings up:

don't pay closing costs up front (pay only the application fee, if required
http://www.stretcher.com/stories/00/000828c.cfm

and:

It has become common to ask the seller to pay some or all of the
closing costs when you purchase a home. Essentially, this is financing
your closing costs since you will probably pay a little bit more more
for the property than you would if you were paying your own costs.

http://www.realestateabc.com/loanguide/closingcosts8.htm

There is a boatload of fees, points, commissions, etc. in a real
estate transaction that can be bargained down as well as the official
asking price. Every financier is different and there are a lot of
scumbags out there. I bought our first property the "normal" way and
paid a lot of extra fees. If I could do it over, I would look for a
distressed property (hurricane/fire/layoff) or a tax delinquency. I
have since bought tax delinquencies for nickels on the dollar. Be sure
to see them first, however! Go to your courthouse and ask about
tax-delinquent properties. There are many because people die, go
crazy, get arrested, divorce, lose jobs etc. Watch the paper for
stupid folks who beat children, dogs, etc. Write down the address and
check with the court next year. Don't rush into anything. As a
potential buyer, you have the upper hand. Once you sign, you're stuck
with your choice.
shoaib-ga rated this answer:5 out of 5 stars
I have  reached the  target  of  my  question  but  the way  I have 
reached  that  target  was   not  excellent. But  overall  the  answer
 was  appreciable.

Comments  
Subject: Re: Loan question!
From: maluca-ga on 12 Oct 2004 13:54 PDT
 
This answer is so wrong it borders on criminal.
Subject: Re: Loan question!
From: rbt-ga on 17 Oct 2004 08:56 PDT
 
I believe the answer you are seeking can be found at www.bankrate.com:
 "A home loan for $333,700 or less will be counted as a conforming
mortgage throughout 2004.

"Conforming" home loans are those that conform to rules that Fannie
and Freddie issue. These agencies then bundle and sell the loans in
the secondary market, a process that creates an efficient mortgage
market in the United States and holds mortgage rates down on those
loans.

A home loan above the conforming amount is a jumbo mortgage. Rates on
jumbo mortgages tend to be about one-quarter to one-half a percentage
point higher than the rates for conforming loans."

Hope this helps.
Subject: Re: Loan question!
From: mrates_com-ga on 29 Oct 2004 11:55 PDT
 
rbt-ga is correct.  

Conforming loans will be purchased wholesale by Freddie Mac and Fannie
May.  Non-conforming loans have different wholesale investors.

Most mortgages originated are Conforming, but there are many
outstanding loans in both areas.

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