Americas Watchdog Accuses Federal Reserve & Congress of Looking the Other Way On U.S. Banks and Mortgage Bankers Hiding A Huge Mortgage Kick Back Called a Yield Spread Premium That Affects 50 Million Current U.S. Homeowner’s Monthly Mortgage Payments
According to Americas Watchdog, “The US Federal Reserves suggestion to clamp down on mortgage bankers, and US banks is a pathetic joke. The most important issue, called a yield spread premium, was for obvious reasons overlooked. The US Federal Reserve should be forced to explain to Congress why US banks and Mortgage Bankers do not have to disclose a huge kick back for inflating 50 million+ US homeowners interest rate/monthly mortgage payment.”
There is one slight problem. According to Americas Watchdog, “The US Congress has been bought and paid for by US Banks, US Mortgage Bankers, and National Home Builders for years. The poster boy for this is US Senate Banking Committee Chairman Chris Dodd (D) (source NY Times). He’s a perfect example of a bought and paid for member of Congress. He received a wink and a kiss mortgage from the now notorious mortgage lender, Countrywide Home Loans.”
The US Congress has been bought and paid for by US Banks, US Mortgage Bankers, and National Home Builders for years. The poster boy for this is US Senate Banking Committee Chairman Chris Dodd (D) (source NY Times). He’s a perfect example of a bought and paid for member of Congress. He received a wink and a kiss mortgage from the now notorious mortgage lender, Countrywide Home Loans.
Americas Watchdog and its National Mortgage Complaint Center have been demanding U.S. Congress and the U.S. Department of Housing and Urban Development (HUD) initiate regulatory reforms, regarding a huge kick back called a yield spread premium for four years. A yield spread premium is a huge kick back mortgage bankers, U.S. banks, and mortgage brokers get for inflating a borrowers interest rate and monthly mortgage payment. According to Americas Watchdog, “here is the amazing part”:
* U.S. Mortgage Brokers must disclose the yield spread kick back for inflating a borrowers interest rate and monthly mortgage payment on the Good Faith Estimate the borrower gets before closing, and the HUD-1 Settlement Statement the borrower gets at closing (even though 95% of all brokers never bother to explain to homeowners, what a yield spread premium is, or what this kick back for inflating the consumers interest rate does to their monthly mortgage payment)
* According to Americas Watchdog, “Banks play the same games, they also all get the yield spread premium kick back, for inflating the borrowers interest rate and monthly mortgage payment, yet they have no disclosure requirement at all?”
According to Americas Watchdog, “It is the most reprehensible consumer finance double standard in U.S. history, and the U.S. Congress does nothing? 50 million U.S. homeowners currently pay a higher monthly mortgage payment because a bank or mortgage banker played this game, and they have no disclosure requirement?”
On July 8, 2008, the U.S. Federal Reserve Chairman made the following comment, “Chairman Ben Bernanke says the Federal Reserve will issue new rules next week to shield prospective home buyers from the deceptive lending practices that snared many of the nation’s riskiest borrowers, paving the way for the sub prime fallout. Under the proposal unveiled last December, the rules would restrict lenders from penalizing risky borrowers who pay loans off early, require lenders to make sure these borrowers set aside money to pay for taxes and insurance and bar lenders from making loans without proof of a borrower’s income.”
According to Americas Watchdog, “It is astonishing the Fed would not even mention banks, or mortgage bankers having to disclose the yield spread premium. 50 million+ current U.S. homeowners got a higher interest rate, and a higher monthly mortgage payment, because banks and mortgage bankers paid off Congress to look the other way!”
* Special Note: Chris Dodd (D) is still the U.S. Senate Banking Committee Chairman after his “special loan” from Countrywide Financial. (“U.S. Senator Dodd should get his own section on the mortgage implode-o-meter,” says Americas Watchdog.)
Alternatives to the Rescue?
* Obama To The Rescue? “We think he is still supposed to be a U.S. Senator,” says Americas Watchdog. According to the Wall Street Journal, “James Johnson, one of three people tapped by Mr. Obama recently to oversee the search for his running mate, took at least five real estate loans totaling more than $7 million from Countrywide Financial Corp. through an informal program for friends of the company’s CEO, Angelo Mozilo.”
* McCain To The Rescue? Very Doubtful. “We think he is supposed to be a U.S. Senator too,” says Americas Watchdog.
* President Bush to the rescue? “Very doubtful too. His 2004 re-election gala celebration was paid for by Ameriquest. Another real prize of a mortgage company, that has since gone out of business. In 2005 Ameriquest Mortgage was fined over $300,000,000 by more than 40 State Attorney Generals for cheating U.S. consumers,” says Americas Watchdog.
Americas Watchdog has been demanding universal disclosure of the yield spread premium kick back for at least 4 years. The best Congress/the Fed has been able to do so far is to suggest that mortgage brokers should be finger printed, and or offer an insane $300 billion consumer bailout that is little more than a colossal waste of tax payer money/bank bail out for making idiotic loans.
* To prove the point about yield spread premiums, Americas Watchdog and its National Mortgage Complaint Center are now offering to help all State Attorney Generals with their investigations of Countrywide Financial. The group is suggesting that State Attorney Generals subpoena Countrywide’s Full Spectrum mortgage transactions given to African American borrowers. If there is a “Loan Discount” indicated on the borrower’s HUD-1; find out how much Contrywide received on the “yield spread premium” (un-disclosed to the borrower because Countrywide was a bank/mortgage banker).
According to the National Mortgage Complaint Center, “Its kind of hard to have a loan discount, and then get a undisclosed kickback in the $1,000’s for actually raising the borrowers interest rate! There are literally tens of millions of Americans who had a bank or mortgage banker do the same thing — with no disclosure requirement!”
According to Americas Watchdog, “After we prove the point on Countrywide, let’s do the following”:
* “Help the IRS and most states go after most national and regional home builders for — oops — forgetting to pay state or federal taxes on the over 1 million undocumented workers, they used to build most of our nation’s new homes since 2000. The home builders called them sub-contractors and gave them 1099’s — it was a big lie — but that’s OK. Big home builders give lots of money to the U.S. Congress and State Legislatures too!” Americas Watchdog estimates that U.S. home builders owe the IRS alone over $100 billion in back federal taxes.
So what is a U.S. homeowner to do? According to Americas Watchdog, “Write your U.S. Congress person or U.S. Senator and ask them if they have taken money from a U.S. banker, a U.S. mortgage banker or a U.S. home builder. If they write back and say yes — tell them they just lost your vote.”
Americas Watchdog and its National Mortgage Complaint Center are all about consumer protection and corporate responsibility. Americas Watchdog’s Web sites are located at http://AmericasWatchdog.com.