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D R
Father, Husband, Philanthropist, Author, Visionary, Educator, Philosopher, Investor, Credit Guru
Is this the END of the mortgage banker/broker/agent as we know it?
The U.S. H.R. is considering a bill that will fundamentally change the way we are paid, outlaw YSP, and legislate underwriting guidelines into FEDERAL law. Additionally, I fear that all sub-prime lending will cease to exist due to excessive lender liability.
A quote from the ANTI H.R. 3915 legislation website...
http://www.petitiononline.com/HR3915/
"We want to express our opposition to H.R. Bill 3915. We believe it is burdensome to the independent mortgage broker, anti-competitive, and in the name of consumer protection, it will actually harm consumers. In an already tough lending and real estate environment, this bill will put additional unneeded pressure on real estate prices and cause unforeseen harm to homeowners, mortgage professionals and real estate professionals everywhere. It will also limit the choices consumers have in finding a residential mortgage loan to strictly large financial institutions."
The National Association of Mortgage Brokers (NAMB) has this to say...
Title 1 This section creates a minimum licensing standard for all originators and net worth or bond requirements of $100,000.
Title 2 creates an ability to repay standard and hard-wires underwriting guidelines. Underwriting will include a verified ability to repay and take into account amortizing payments.
Title 3 will expand the existing Section 32 of TILA by reducing the points and fees triggers and expand lender liability. Prohibitions include no balloon loans, no lending without regard to ability to repay, restrict late fees, and prohibit the financing of any points/fees. Taken together, the expansive liability and prohibited terms and conditions will make Section 32 lending practically impossible."
Resources...
http://www.house.gov/apps/list/press/financialsvcs_dem/subprimeleg.pdf
I believe that if passed, this bill will end lending as we know it... what do you think?
I'm open to connect with you...
druiz # homesolution # com
Clarification added 10 months ago:
Seems some of the answers are referencing the sub-prime lending practices and the current issues with the lender market or availablility of money in those arenas... My question is specifically about the POSITION of the mortgage banker, mortgage broker and mortgage agent... that with the passing of this bill makes those positions extinct, except when the agent is in the employ of an FDIC bank... IMHO.
Good Answers (2)
Moti L
Tansforming Lives - Creating Wealth (motiLinked (at) LearningByYourself.com)
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Yes, it will change the lending marketplace. However, I suspect the law of unintended consequences would raise its head. The objectives of the bill are to reduce predatory lending practices and create more responsible lending.
Here is, however, what I expect will happen:
#1 will limit entry into the market. This, on the surface, should reduce bad originators as it would be more difficult to enter the market. In fact, what it will do is to increase costs exactly because those who can enter the market would have more market power!
#3 is supposed to prevent abuse of knowledge (on th side of the originator/broker/lender) but in effect would not have much teeth in the long run as history proves that when money is concerned ingenuity is amazingly good.
#2 & #3 combined are supposed to reduce predatory lending, high fees, and such other bad things. However, if we examine who really lost due to the crisis - it is not the "mortgaged to the teeth and couldn't buy a house before" borrowers but the banks. Most foreclosures due to this current situations are not on low mortgage/value properties but on fully mortgaged or even upside down properties. Thus, borrowers did not lose what they didn't have to being with! Yes, some speculators found themselves out of the money, but that's the price of speculation, again, as the banks found out.
What #2 & #3 will do is to prevent borrowers from being able to take on some risk. This ALWAYS harms lower-middle income borrowers more than high-income ones. The former do need to be able to take on this risk as this is, often, their only way of gaining any substantial wealth. The latter will be able to take risk as they like anyway.
To summarize: this regulation will only hurt the market and consumers, especially lower income ones, and not achieve its goal of reducing predatory lending.
John Jamie H
Internet Sales/Marketing & Web Development at www.sportsunlimtedinc.com
the fact that there has been companies / people that have taken advantage of loopholes and acted grossly unethical is disappointing to me. There needs to be competent refereeing on the standards. but....to answer your question ...you only have to look at the financial market bubble and after effects of that to give you a guide your thoughts.... brokers, financial advisors, analysts still exist and thrive in the market....
the fact is the rise of real estate investors and the huge cultural movement for people to be owners will continue to fuel the need for intelligent & hardworking brokers to meet the need and get the best financing options for that financee
one last thing i liken the service also to a job recruiter- it gets someone working on your side and breaks through a person's feeling of uneasiness or lack of confidence of pursuing financing...
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Joseph W
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The term "pounding rubble" comes to mind. Sub-prime lending is already dead because the money has all dried up. Regardless of what legislation is or is not passed, the industry is going to be shaken up.
Sara F
Nonprofit Professional
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The key, Mark, is "lending as we know it." Lending as we know it is seriously flawed, to the point where it is having an impact not just on the subprime market but on ALL buyers and sellers. If something regulatory can be done to prevent unethical business practices, and prevent people from being exploited or being taken advantage of, then I'm all for it. (I know, I'm such a freakin' liberal!)