First Mortgage

Dear Mr. Azrael:During the spring, I was sent information about refinancing [a second mortgage].[The mortgage company] told me they received a list of requirements from [my first mortgage holder].The requirement that I had to fulfill was to send in a check for $150. They needed to receive the money before the subordination agreement would be prepared. I did as instructed.In September, I received the settlement package in the mail. I noticed that lender services was charging an additional $100 for the work performed by [my first mortgage holder]

Several readers have been asking when they can cancel their private mortgage insurance.When a homebuyer's down payment is less than 20 percent of the purchase price, the lender often requires the homebuyer to purchase private mortgage insurance, or PMI. PMI protects the lender against a deficiency in case the borrower defaults and the home does not bring enough money at a foreclosure sale to pay the lender in full.PMI is expensive -- $25 to $65 a month on a $100,000 loan. The cost of PMI is added into the homebuyer's monthly mortgage payment.

Dear Mr. Azrael:I'd like to know if there's any way that I can purchase a house using my own home as equity without having to make any significant down payment. I presently owe about $13,000 on a $160,000 home. Thank you.Curt GlobalFallstonDear Mr. Global:Your home has substantial equity. Equity is the difference between the value of your home and the amount owed on it. Assuming you have good credit, you easily should be able to borrow 60 percent to 80 percent of the equity in your home. This borrowing power could be used to provide a down payment for purchasing a second home or investment property.

IF YOU'RE buying or refinancing a house, and putting less than 20 percent down, the bank requires you to buy mortgage insurance. This guarantees that the lender won't take a major loss if you default.But banks are getting more aggressive. They'd like to lay hands on the money you're paying to the insurer.So in place of mortgage insurance, many are offering something called a piggyback loan. You pay a higher interest rate on asmall part of the money you borrow. That higher rate helps offset the bank's losses from defaults.

TWO OF THE country's largest sources of mortgage money have created an unusual financing package for 1998 -- a loan for cash-strapped homebuyers that exceeds the cost of the house they purchase.The extra money in the loan package -- up to 3 percent beyond the property's market value -- must be used for closing costs and escrows.The package concept, which is being introduced by mega-investor Freddie Mac and Irvine, Calif.-based WMC Mortgage Corp., goes by the name "103 combo."It is designed for buyers with at least moderately good credit histories who haven't been able to accumulate enough cash to pay for both a home down payment and the closing costs.

A NATIONWIDE price war has broken out among lenders, homebuilders and mortgage insurers for the business of TC once-neglected group of consumers: homebuyers who can afford no more than a 10 percent down payment, but who also don't like the idea of making monthly mortgage insurance payments. If you fit the description, you might be able to cash in.Traditionally, buyers who can't come up with a 20 percent down payment have been forced to purchase private mortgage insurance (PMI) to cover the lender's heightened risk of loss in the event of default or foreclosure.

Dozens of home-sale deals across the state threatened to fall apart yesterday, as title agents, borrowers and sellers learned that Columbia-based Consumer First Mortgage Inc. had failed to deliver on some 60 loans and abruptly shut down Wednesday.The mortgage company's failure to fund loans for houses set to change hands at the end of July set off a panic among title companies handling those property settlements, raising questions about who owned the houses or held the loans.Some companies -- believing mortgage money had been wired to their accounts -- conducted property transfers, paying off sellers, real estate agents and other expenses, only to find Consumer First had sent no money.

Consumer First Mortgage Inc. has been taken over by four lenders who stepped in after the Columbia-based mortgage broker abruptly shut its doors with nearly 650 home loans in the pipeline, Maryland's bank commissioner said yesterday.The 648 mortgages that Consumer First failed to bring to settlement before its shutdown at the end of July have been distributed among Virginia First Mortgage, a division of Virginia First Savings Bank; Carroll County Bank and Trust Co.; MNC Mortgage Corp.; and Mortgage Edge Corp.

The mortgage division of a Virginia-based savings bank took over four branches of the defunct Columbia-based Consumer First Mortgage Inc., which abruptly shut down last week with more than 600 home loans in the pipeline.Branches in Columbia, Timonium, Bel Air and Frederick -- along with their employees and home loan business -- became part of Virginia First Mortgage yesterday in a deal arranged over the weekend by the two lenders' officers, said Gary Martin, chief executive officer of Virginia First.

Q: My husband and I are renting a house in Westminster with the option to purchase it. The owner of the house has offered to take back a second mortgage for part of the purchase price if we exercise our option and buy the house. How will this help us get a first mortgage to purchase the house?K. Houck, WestminsterA: The seller's offer to take back a second mortgage for part of the purchase price will help you get a first mortgage for the house you are now renting.Homebuyers need to borrow from 90 percent to 95 percent of the purchase price of a house in the form of a first mortgage from a lender in order to buy a home.

Everybody wants to help keep people in their houses and out of financial stress and foreclosure, right? That's what the Bush administration says, and that's what top executives of major banks, mortgage companies and Wall Street investors all say. But where the proverbial rubber hits the road -- at the point where individual homeowners seek to refinance or modify their mortgage terms -- things may look different. Take the case of Robert Whittaker, a Sykesville homeowner who sought to refinance a $260,000 first mortgage recently when 30-year rates fell below 6 percent.

HOMEBUYERS WITH high credit scores but minimal down payment cash are about to get a new, potentially helpful mortgage option. It comes with a catchy name - the "SingleFile" low down-payment mortgage. But it also comes with some wrinkles you need to know about upfront. SingleFile loan down payments can go all the way to zero. Maximum mortgage amounts can extend well into the jumbo category: $650,000. However, you need to have a FICO credit score of 700 or higher - a tough hurdle for some buyers short on cash.

Some readers ask whether there is any way to cancel mortgage insurance on Federal Housing Administration loans. Mortgage insurance on FHA loans does not automatically cancel even if the loan-to-value ratio has improved substantially. This is different from private mortgage insurance. With FHA loans, you must pay the monthly mortgage insurance premium as long as you own the home or keep the loan. But in the current real estate market, with rising home values and low mortgage interest rates, folks who are paying government mortgage insurance should investigate refinancing to a conventional loan which does not require mortgage insurance.

When shopping for a mortgage to purchase or refinance your home, here are some tips: If you know you're going to sell the house within the next seven years, consider alternatives to the usual 30-year fixed rate mortgage. Adjustable rate mortgages (ARMs) are available at lower rates than fixed-rate loans. Lowest rates apply to mortgages that adjust every year. Progressively higher rates are charged for ARMs with rates that are locked in for three years, five years or seven years. After the lock-in period, the ARM interest rate adjusts at that time to the then-current index rate, plus a predetermined margin (i.e.

WHAT MAY be the most significant innovation in the American home-mortgage field in more than two decades officially hit the market last week. It's called the "home-asset management account." It grafts a growing equity line of credit onto a standard home mortgage, and essentially makes tax-deductible home equity the centerpiece of a borrower's personal financial affairs. It turns your house into a bank that's always open - if you choose to use it. Here's how it works. You apply for a home-asset management account instead of a traditional mortgage.

MORTGAGE borrowers who feel less secure in the wake of terrorist attacks and the rising national unemployment rate have a little-known financial tool available to them: Insurance coverage that provides up to half a year's worth of mortgage payments in the event of involuntary unemployment. The concept works like this. For a modest charge, you, your lender, a homebuilder or home seller can purchase a policy that insulates a mortgage against tough economic times. The plan pays up to $2,500 a month to keep you current on your mortgage obligations, should you lose your job. The source of the unemployment coverage for your mortgage can be varied and creative: Your lender can offer it as an incentive, either at a small cost or at no charge, to win your long-term loyalty as a customer.

A STARTLING new study says American homeowners are in the process of rewriting the traditional rules of refinancing: Rather than getting a new mortgage at a lower interest rate, they are taking out larger loans at rates slightly higher than what they were paying before. After a statistical analysis of recent refinance transactions in a national database of 14 million loans, mortgage market researchers report that the average borrowers in the current refinance boom took out loans $41,000 larger and at an interest rate 0.6 percent higher than they had before the refinance.

Dear Mr. Azrael, I am currently in a dispute with my lender over private mortgage insurance (PMI). I purchased my townhouse in November 1998 and did so with nothing down and an 80 percent [loan-to-value] first mortgage and a 20 percent second mortgage. Only recently, when considering refinancing, was it brought to my attention that I have been paying PMI and no one can figure out why. I was under the impression that the whole reason for splitting a loan ... was to avoid PMI. I sent a letter requesting the PMI be dropped from future payments as well as a refund of previous payments.

The Maryland operations of a Long Island-based Internet mortgage company have been shut down by state regulators after it was discovered that the company had failed to provide approximately $1 million to borrowers who had paid upfront fees and gone to settlement. Apponline.com Inc., which also did business as Island Mortgage Network Inc. and Reliance Mortgage Network, was given a final "cease-and-desist" order yesterday by Maryland Commissioner of Financial Regulation Mary Louise Preis.

Several readers have been asking when they can cancel their private mortgage insurance.When a homebuyer's down payment is less than 20 percent of the purchase price, the lender often requires the homebuyer to purchase private mortgage insurance, or PMI. PMI protects the lender against a deficiency in case the borrower defaults and the home does not bring enough money at a foreclosure sale to pay the lender in full.PMI is expensive -- $25 to $65 a month on a $100,000 loan. The cost of PMI is added into the homebuyer's monthly mortgage payment.