LIBOR Warning Florida Residents – Do you have a LIBOR mortgage?

LIBOR Warning Florida Residents – Do you have a LIBOR mortgage?

The LIBOR rate has spiked in recent weeks and if your mortgage is an adjustable rate loan that is based on a LIBOR index you should be concerned.

Why is this something to be concerned about?

What is the LIBOR?

From a recent report on Bloomberg this week..
“The overnight Libor rate in U.S. dollars soared 3.33 percentage points to 6.44 percent today, its biggest jump in at least seven years, according to the British Bankers’ Association. The one-week rate rose by more than a percentage point, to 3.88 percent from 2.49 percent on Monday, and the one-month rate increased to 2.75 percent from 2.5 percent.”

LIBOR = “London Bank Inter Offered Rate”. It is a rate index that is set by the British Bankers’ Association.

The LIBOR was created in the mid 80’s. The index became widely used in the mid to late 90’s by US mortgage lenders as the preferred index for adjustable mortgages. Most subprime and over 40% of conforming adjustable rate loans are based on a LIBOR index.

Because the LIBOR index was created and set by the British Bankers’ Association these loan rates cannot be controlled by the FED.

If the LIBOR’s recent increases continue the adjustable rate mortgage payments that are tied to the LIBOR could more than double at adjustment time.

Most LIBOR based loans are tied to the 6-month index. This means that the rate is a rolling 6 month average. So will a short term spike cause you rates to jump? No. But an ongoing increase will.

If you have a LIBOR rate keep a very close watch on the monthly rate.

Do not wait for the rate to spike before you have an exit strategy.

You should discuss your options with a mortgage professional – if you would like to discuss your situation and posible solutions please contact me.

10 Companies, 15 Individuals Sued for Mortgage Fraud in Central Florida

According to the lawsuit, American Heritage Mortgage Group, Inc. and Security One Mortgage Corp. processed the fraudulent loan applications. The participants allegedly used companies they owned or controlled to divert more than $6 million from the fraudulently obtained mortgages at the homes’ closings. Further, in many cases, the defendants allegedly failed to make the required mortgage payments on behalf of straw buyers and allowed 50 properties to fall into foreclosure.

Attorney General Bill McCollum today announced that his office has sued ten companies and fifteen individuals for their alleged roles in a significant mortgage fraud scheme in Central Florida. The ring obtained more than $37 million in mortgage loans for at least 60 home purchases and siphoned off more than $6 million of those loan proceeds for their own use. The lawsuit was filed this week in Orange County Circuit Court by the Attorney General’s Mortgage Fraud Task Force.

Beginning in July 2005 and continuing through at least January 2007, three of the ring’s leaders allegedly defrauded banks by recruiting straw buyers with good credit and using these straw buyers to create false loan applications to purchase homes. They also allegedly created and provided fraudulent supporting documentation for the mortgage loan applications including false employment information and verifications for the straw buyers, whose purpose was to conceal the true identity of those behind the purchasing process. The lawsuit claims the ring conspired with realtors to artificially inflate the purchase prices of homes, thus enabling them to obtain larger mortgage loan amounts.

The lawsuit names American Heritage Mortgage Group, Inc., Security One Mortgage Corp., Security Trust Title LLC, Trincity Trucking Inc., Allen Boyarsky, Stephen Mahadeo, E. Brooke Co. LLC, Longdenville Investment & Management Inc., American Heritage Commercial Capital, P & R Funding Corporation, Steele Property Investments, Inc., Bethann Schuldiner, Anthony Didonato, Steve Groden, Brad Frank Groden, 1st Capital Mortgage Associates, Inc., Heather Showalter, Jeanette Lugo, Magdalene Williams, Norma Lopez, Kenneth West, Marcus Habeeb, Luis Delgado, Aziz Mohammed, and Betty Bedeau.

Lenders including IndyMac Bank and New Century Mortgage are among those banks affected by the scheme. The Attorney General’s lawsuit requests injunctive relief prohibiting the defendants from continuing the alleged behavior and seeks damages for those who were targeted by the scheme. Civil penalties of $10,000 per violation of Florida’s Deceptive and Unfair Trade Practices Act are also being sought.

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