Ryan's Mortgage Blog:
"The House Financial Services Committee today passed H.R. 3915, the Mortgage Reform and Anti-Predatory Lending Act of 2007 by a vote of 45 to 19. During the committee's consideration of this bill, several amendments were offered, which attempted to fundamentally change the scope and, ultimately, lessen the adverse impact on the mortgage origination system." - CAMB Government Affairs Chair, Ed Smith Jr.
This bill was created to help consumers from Predatory Lending habits, putting many restrictions on mortgage brokers. Ok, I am sounding a little biased but this bill is aimed at my occupation, but I am trying to keep an open mind about it. I have read several articles about this bill both for and against it, but I have yet to read the whole bill in its entirety. I want to get the dirty mortgage brokers out of the business just as bad as the next guy, but this bill will severely handcuff the way mortgage brokers do business. From what I have read, this bill would put most of the power in the hands of the big banks who will be able to control the prices (raise them to the consumer), while running out the brokers. I have heard the words "monopoly" and "similar to Microsoft and the cable company" passed around the watercooler. As in any business, the more competition that is out there the better deals and more options there will be for consumers. While much of the blame is being put on brokers for the current housing/mortgage crisis, getting rid of brokers is not the answer to the problems. Keep in mind Lenders/Banks have the final say in ALL loans, not the mortgage broker. Now I will admit there was a major problem with brokers inflating stated incomes and putting pressure on the appraisers to reach a price, but you can't blame the brokers for everything going on. This bill is limiting the cash back/yield brokers would be getting from banks, and these kind of deals make it possible for the borrower to get a "no or low cost" mortgage. While this is not for everyone, and I am not saying no closing costs mortgages are good or bad, I still feel it should be an option for people. I do feel some people have been taken advantage of from brokers taking large yields from the bank, so a limit on the yields would be acceptable if done properlyn butI have heard what the original bill was asking for was unacceptable. Ultimately I would like to see a resolution that would help protect borrowers while keeping a competitive lending industry going.
Just another tid bit of info..right now brokers have to disclose how much they make on a loan BEFORE the borrower signs the documents, while banks do not have to do this. Also, I don't want to make any Real Estate agents mad, but in terms of costs for buying/selling a home, Real Estate Agents are making much more on these deals than the brokers are. Granted some agents work hard and deserve the money they make, but in terms of saving the consumers money, it's not just the brokers who are profiting here. With that said, let me also say one reason I write in Keith's Blog is because he is one of the good guys out there. You can tell this by just going to his webpage where he offers a plethora of information to consumers AT NO CHARGE! He is an honest guy who works hard for his money and is not out there to rip people off and this is what we need in the business, and this is what I strive for as well. And no Keith did not put me up to writing any of this, I just thought it needed to be said!
Anyways, this bill is still a long way from being implemented as it has several more stages and amendments to go through. I just wanted to make you aware of it as a consumer since it may not be in your best interest to have this passed. I would love to hear any feedback about this bill both for or against since I am still learning about it myself.
I can be reached at RBaker@PeregrineLending.com or 805-540-0866.
