The H.R. 1728: Mortgage Reform and Anti-Predatory Lending Act is a problem that all mortgage and real estate professionals need to pay attention to.
My first rule of blogging has always been to avoid political discussions, especially if I’m not an expert on every angle of the topic.
So, with my second post to the BHB, I’m breaking all of my rules…. I guess this means that I’m starting to get the hang of things around here.
The difference with this post is that I’m putting my self-consciousness and ego aside for a moment. I believe that there is way too much at stake for me to wait around until I’m comfortable putting my neck on the line. I’m taking Greg’s 70% approach and running with it
If I’m wrong or barking up the wrong tree, I humbly respect that the Hounds of this community will set me straight. Matter of fact, I’ll do my best to encourage any type of discussion, rant, or other demonstration of disgust, as long as it helps us get closer to the truth behind HR 1728.
Here’s the deal, friends – HR 1728 has passed the House, which means it still has to go before the Senate and then pass Obamanomics before it becomes a law.
I’ve spent a significant amount of time reading, researching and writing about how mortgage originators can battleback against this new Mortgage Reform bill.
I’m either missing a beat, presenting the wrong info, or not yelling loud enough, because it doesn’t seem like there is much talk online about how this new Anti-Predatory Lending bill will impact our industry.
Obviously, HVCC is getting some reaction, probably because people are already feeling the pain in their wallets.
However, a lot of us may have to turn to online gaming and selling weed to make a living if H.R. 1728 makes it through the Senate without our voices being heard.
What are the main bullets of HR 1728 that I care about?
- Mortgage brokers lose the ability to use their YSP (Yield Spread Premium) to offer No-Cost mortgage loans. Banks, on the other hand, still don’t have to disclose their same (SRP).
- It will be a 30 year fixed rate only world, or borrowers will have the ability to sue lenders for up to three times their loan amount.
- Mortgage companies will have to put up 5-10 percent in reserves on any loan that they originate, fund or transfer – other than the standard full doc 30 year fixed. This will basically force all non-depository lenders out of the business. Yipee for big Government owned banks!
- Nobody (including attorneys) will be able to charge homeowners to negotiate with a lender on the borrower’s behalf for better loan terms. This is bad, I don’t care what your opinions are about the loan modification business. There has to be an equal balance of power, and homeowners should have the right to pay an expert for a fair trial.
Whether you believe that the current foreclosure crisis is a result of the Clinton Treasury Department’s 1995 regulations which made getting CRA ratings much harder, Fannie Mae’s attempt to increase home ownership, or maybe something more obvious like Credit Default Swaps, the politicians and big banks find it more convenient to just blame mortgage brokers.
The thing that pisses me off the most about this bill is its name –
“Anti-Predatory Lending”
WTF! – I mean, who doesn’t think that Mortgage Reform is good and Predatory Lending is bad?
They have given a complex bill a creative name to fool our clients and professional colleagues who are too busy dealing with their own nightmares to see a new one on the horizon.
When a few banks control our industry, mortgage rate and program options become limited.
The following videos could probably sum up the past 10 years and how we got to this new Anti-Mortgage Originator Act:
Video 1: Barney Frank – Pro Housing, Fannie Mae, and Sub-Prime
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Video 2: Barney Frank “There is no housing bubble, we’ll be fine or the Government will bail us out.”
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Video 3: Barney Frank – The Republicans caused this mess
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Video 4: Rep Brad Miller – Borrowers were duped into bad loans (min. 4-6)
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Confused yet? Having a hard time trying to decide if it was the Republicans or Democrats who let this happen?
Don’t worry about it, they are probably going to spend the rest of eternity trying to blame each other while the consumer and active real estate / mortgage professionals pay the price.
I’m not open to a political debate, but maybe some of the readers here are. My main objective for posting this article is to create awareness, and hopefully an educational discussion.
Like I mentioned earlier, I barely feel qualified based on my overall knowledge of this topic to write about it. Either way, motion creates emotion.
Whether you feel the need to express your opinions in the comment section, or you bring H.R. 1728 up in your next office meeting, we need to start creating noise.
Michael Patton says:
Mark,
You may not have known this about me, but my first few years in the business back in the late 70’s were as an assistant to an MAI, which led to a staff appraiser position with a Savings & Loan (which may have all but been extinct before you got into high school, but that’s another story).
Anyways I’ve never lost interest in appraisal – though I sure don’t want to do it to earn a living… and have found interesting points being expressed at http://appraisalscoop.com/
From what I’ve read – the appraisal community does not seem too thrilled with the direction their business is going either; good appraisers will have their opportunity to build a business castrated (sounds almost like nationalized health care – we all get the same service regardless of the strength or weakness of the providor… our choices are being taken away from us!)
Having been a mortgage originator for 20+ years and a real estate agent for another 10, I can appreciate the concerns from all sides – and I too, doubt that I have the perfect answer for all concerns.
Fraud and too much influence on values do need to be curtailed, but “nationalizing” everything we do and ultimately killing off the broker/wholesale channel in favor of the banks we taxpayers now OWN certainly doesn’t bode well for the consumer either.
Thanks again for the discussion.
May 22, 2009 — 10:04 am
Mark Madsen says:
>>late 70’s were as an assistant to an MAI, which led to a staff appraiser position with a Savings & Loan (which may have all but been extinct before you got into high school, but that’s another story).
lol – Yep, I was born in 1977.
Thanks for the link to AppraisalScoop, Michael. I’ve spent a little time over there – great stuff.
>>Fraud and too much influence on values do need to be curtailed
Exactly, which is why I believe this bill has a chance. There are several good points in this bill. For example, lenders have to verify that a borrower can actually repay the loan. But, that should be a no-brainer.
May 22, 2009 — 10:15 am
Dave Shafer says:
To bad DC is going after the mortgage brokers, even though it was not they who designed and offered pay-option loans, sub-prime variable, etc. to consumers. They only ran with what was there to offer.
A world where everyone is forced into a full-doc 15-20-30 year fixed rate loan is a world that is dominated by the large banks who don’t have to disclose how much they are making on a loan. Kinda the opposite of transparency, don’t you think?
May 22, 2009 — 11:58 am
Kevin Sandridge says:
Mark – man, you nailed it on this one. Every borrower, re-financer, Realtor, and Mortgage Professional out there needs to be banging down their local US Senator’s door on this one. I’ve already called up Bill Nelson (D) and Mel Martinez (R) on this.
Note: The Mel Martinez staffer I spoke with on the phone hung up on me mid sentence. I called back, bitched, then sent letters to his local FL and DC offices as backup.
May 22, 2009 — 12:15 pm
Benjamin Ficker says:
–They only ran with what was there to offer.
I have been telling this to everybody that blames this mess on Realtor’s or Mortgage Brokers.
Regardless of where the mess started, do you think it will be better if the only people who are going to profit from this bill are the major banks?
Crazy.
May 22, 2009 — 12:21 pm
Mark Madsen says:
Good job on sending letters, Kevin.
Dave – the way the bill currently reads, it is only 30 year full doc – not 15 or 20 years.
I’m sure minor details like that will change, but for sure interest only, ARMs or anything else will be off the table.
I know that a lot of loan officers double dip on the YSP and SRP thing. Charging borrowers a discount fee to “buy the rate down” while making money on a higher premium is bad. I think we need more transparency in lending, not more regulations.
May 22, 2009 — 12:21 pm
Thomas Johnson says:
The obamanation is bought and paid for by the banks and Wall St. Hitler had the Jews as scapegoats, Obama, Geithner and Frank have the mortgage brokers to flog as they cash the big checks from Wall St. and Charlotte. Obmanation owes its existence to its Wall St and new world order benefactors.
May 22, 2009 — 7:53 pm
Tom Vanderwell says:
Mark,
Well said. As I’m reading it, I’m thinking of Atlas Shrugged and the “Anti-Dog eat Dog Rule.”
How’d that work out? Uh, not so good…..
Keep it up.
Tom
May 22, 2009 — 8:06 pm
Joe Hayden says:
1. Create problem through ignorance, willful intent, mismanagement or incompetence.
2. Offer solution to problem you created while successfully misdirecting negative attention from your actions.
3. Repeat as necessary.
It’s an age-old government game… We, of course, are the losers…
May 23, 2009 — 12:50 pm
Steve Trang says:
I love me some big government! Every time one of these bills pass, they end up hurting the people they intend to help the most.
May 25, 2009 — 10:42 pm