{"id":888,"date":"2007-01-12T01:15:56","date_gmt":"2007-01-12T08:15:56","guid":{"rendered":"http:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/?p=888"},"modified":"2007-04-20T16:05:19","modified_gmt":"2007-04-20T23:05:19","slug":"predatory-lending-legislation-can-prey-on-the-responsible","status":"publish","type":"post","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/888\/predatory-lending-legislation-can-prey-on-the-responsible\/","title":{"rendered":"Predatory Lending Legislation Can Prey on The Responsible"},"content":{"rendered":"

New Minnesota Attorney General, Lori Swanson, vows to put an end to predatory lending<\/a>. She formed an 11-member task force to come up with proposals to curb the practice.<\/p>\n

That sounds pretty good unless you don’t know how to define predatory lending. Arizona Governor, Janet Napolitano, pursued this fight back in 2000. She was Attorney General Napolitano then and proposed that Arizona adopt legislation that mirrored the North Carolina predatory lending bill<\/a>. Napolitano had the good sense to listen to banking industry representatives before moving forward and was surprised with some of the things she didn’t know:<\/p>\n

1- No “over equity loans”- VA loans are 103% value loans when a buyer purchases a home; that got cast aside as Arizona has a large military presence.
\n2- No negative amortization loans- three staff members had loans on their homes that were considered a violation of that guideline. They explained the usefulness of those loans as a financial planning tool.<\/p>\n

3- No prepayment penalties- It was quickly realized that prepayment penalties reduce the overall costs of the loan and encouraged responsible home ownership by encouraging homeowners to view real estate as a long-term investment<\/p>\n

4- No balloon payments- balloon payments can reduce the overall cost to the consumer and are now extendable with a good payment history.<\/p>\n

This sounds like I’m an apologist for my industry; I’m not<\/strong>. There are some despicable originators in my industry who have taken advantage of consumers by:<\/p>\n

1- “Steering” them in to more expensive first liens when refinancing for as little as $5,000 cash when a less-expensive second mortgage would have solved the problem.
\n2- Engaging in the practice of “flipping” loans through serial refinance transactions.
\n3- Encouraging borrowers to borrow more money they can afford.
\n4- Making loans to borrowers whom have not demonstrated an ability to repay the loan.<\/p>\n

I wonder if legislation is really the answer to these problems facing our industry<\/strong>. I have repeatedly claimed that legislated loan guidelines stifle creative loan products that encourage homeownership and penalizes the 96% of the consumers who benefit from these loans. Borrowers make poor decisions, often against the advice of an originator. Prepayment penalties, negative amortization loans, Read more<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

New Minnesota Attorney General, Lori Swanson, vows to put an end to predatory lending. She formed an 11-member task force to come up with proposals to curb the practice. That sounds pretty good unless you don’t know how to define predatory lending. Arizona Governor, Janet Napolitano, pursued this fight back in 2000. She was Attorney […]<\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_crdt_document":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[8,5],"tags":[],"class_list":{"0":"post-888","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"hentry","6":"category-investment","7":"category-real-estate","9":"no-featured-image"},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":2153,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/2153\/hr-3915-exploring-the-minds-of-the-enablers\/","url_meta":{"origin":888,"position":0},"title":"HR 3915: Exploring the Minds of the Enablers","author":"Brian Brady","date":"November 3, 2007","format":false,"excerpt":"HR 3915 is referred to as the Mortgage Reform and Anti-Predatory Lending Act of 2007. It was introduced by Congressman Barney Frank of Massachusetts. I explored some libertarian thought about the bill here. I spent the last few days, perusing supporting messages, to discover if I might be mistaken. This\u2026","rel":"","context":"In "Investment"","block_context":{"text":"Investment","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/investment\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":2103,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/2103\/hr-3915-mortgage-reform-and-anti-predatory-lending-act-of-2007\/","url_meta":{"origin":888,"position":1},"title":"HR 3915: Mortgage Reform and Anti-Predatory Lending Act of 2007","author":"Brian Brady","date":"October 25, 2007","format":false,"excerpt":"Congressman Banker...err...Barney Frank co-authored legislation to \"reform\" the mortgage business on Monday.\u00a0 You can view the 66-page text here. Bullet Points of the bill include: 1- Prohibition of \"yield spread premium\" as compensation to originators. 2- Mandatory licensing of mortgage originators by a Federal registry or state regulator.\u00a0 This Bill\u2026","rel":"","context":"In "Real Estate"","block_context":{"text":"Real Estate","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/real-estate\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":8546,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/8546\/the-end-of-no-cost-mortgage-loans-and-other-hr-1728-concerns\/","url_meta":{"origin":888,"position":2},"title":"The End of No-Cost Mortgage Loans and Other HR 1728 Concerns","author":"Mark Madsen","date":"May 22, 2009","format":false,"excerpt":"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\u2026","rel":"","context":"In "Dirty Laundry"","block_context":{"text":"Dirty Laundry","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/dirty-laundry\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":4692,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/4692\/promoting-affordable-housing\/","url_meta":{"origin":888,"position":3},"title":"Promoting Affordable Housing","author":"Brian Brady","date":"September 27, 2008","format":false,"excerpt":"I didn't believe it when I read it; the bailout bill is \"earmarked\" and ACORN is one of the beneficiaries of the largesse. \u00a0 ACORN may control up to 20% of the $700 billion proffered by the Bush\/Obama Bailout Plan. ACORN?\u00a0 Are you kidding me?\u00a0 THIS is what ACORN really\u2026","rel":"","context":"In "Real Estate"","block_context":{"text":"Real Estate","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/real-estate\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":2220,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/2220\/irony-can-be-so-ironic-massachusetts-edition\/","url_meta":{"origin":888,"position":4},"title":"Irony Can Be So Ironic (Massachusetts Edition)","author":"Dan Green","date":"November 14, 2007","format":false,"excerpt":"Massachusetts was one of the first states to put anti-predatory lending laws on its books, ratifying in November 2004. The law includes provisions for borrower counseling, prepayment penalties, and financing of fees. Presumably, somebody thought the law had a positive impact on homeowners because, recently, Massachusetts Congressman Barney Frank authored\u2026","rel":"","context":"In "Lending"","block_context":{"text":"Lending","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/lending\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":2175,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/2175\/psa-watch-the-debate-on-hr-3915-live\/","url_meta":{"origin":888,"position":5},"title":"PSA: Watch the Debate on H.R. 3915 Live","author":"Morgan Brown","date":"November 6, 2007","format":false,"excerpt":"The debate is underway in the Financial Services Committee on The Mortgage Reform and Anti-Predatory Lending Act of 2007 you can watch it live here. (Clicking this link will launch your video viewer). I'm interested in seeing how poorly the politicians understand the concepts they are debating. Enjoy.","rel":"","context":"In "Lending"","block_context":{"text":"Lending","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/lending\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/888","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/comments?post=888"}],"version-history":[{"count":0,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/888\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/media?parent=888"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/categories?post=888"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/tags?post=888"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}