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borrower excessive fees so the brokers can make money. There is too much temptation on the part of lenders and what they will pay a broker if they can sell a higher interest rate or particular program to a borrower.

Right after 9/11, there was a huge increase in hiring of loan officers. If you could dial a phone, fill out an application and charge fees, you had a job. Everybody wanted to get in and made money, many at the unfortunate expense of unaware borrowers. I have seen previous felons selling loans out of a cubicle, on the phone and working under the license of someone else, churning and burning refinances with leads bought from the three credit bureaus. The mortgage business in general was a chaotic mess of those just scrambling to make a buck and lenders turning a blind eye or even helping make sure the loan packages were "fixed" to qualify for programs that made the most money for the lender and the loan officer. Margins were huge and yield spread premiums big.

Now government wants to get in and regulate and throw "quick fix" economic stimulus programs out there that sound good but really only delay the serious issue of economic meltdown. Government sponsored loan programs are not good for most buyers, sellers and seniors.

For example, FHA programs require mortgage insurance or PMI if more than 80% of the price of the home is financed. This can be as much as $400 or more per month that the borrower is paying so the lender to assured that the borrower won't default on the loan. This is often not quoted as part of the monthly payment and most borrowers don't find out about it until escrow, if they are paying attention to the disclosures. Once you have this type of loan it is very difficult to get the insurance removed, even if you owe less than 80% of the market value of the home. One way of avoiding this is to break the financing into two loans, 80/20, but the rate on the second loan is usually much higher than the first and still adds up to a higher payment that is a stretch for most borrowers.

Reverse loans are a government sponsored rip off. In my opinion, no one should ever take one of these out unless they are having serious health issues and can't pay for treatment. The loan amount versus the net loan is usually not worth the price you pay in mandatory fees. The broker doesn't determine the fees, it is the government. The AARP website has a great calculator to see what I mean; www.aarp.org. They also have several good articles that help educate

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