S. 2452 would amend the Truth in Lending Act to provide protection to consumers with respect to certain high-cost loans.
Detailed Summary
Home Ownership Preservation and Protection Act of 2007 - Amends the Truth in Lending Act to redefine high-cost mortgages and attendant lending practices. Sets forth a new formula for points and fees for open-end loans, and provides for bona fide discount points.
Prohibits: (1) prepayment penalties; (2) balloon payments; (3) yield spread premiums; (4) acceleration or debt; (5) evasions, structuring of transactions, and reciprocal arrangements; and (6) modification and deferral fees.
Prohibits creditors from financing, in connection with a high-cost mortgage, any prepayment fee or penalty, or any points or fees.
Prohibits an originator from making or arranging a high-cost mortgage loan that involves a refinancing of a prior existing home mortgage loan unless the new loan will provide a net tangible benefit to the consumer.
Sets forth prerequisites for subprime and nontraditional home loans, including: (1) an assessment of ability to pay; (2) a requirement of tax and insurance escrows; (3) prohibition of prepayment penalties and yield-spread premiums; and (4) a requirement of net tangible benefit to the consumer in the case of a subprime or nontraditional mortgage loan transaction that involves refinancing of an existing home mortgage.
Imposes a duty of care and a duty of good faith and fair dealing upon mortgage brokers and lenders, appraisers, and lenders and loan servicers.
Empowers state Attorneys General to enforce this Act.
Subjects lenders, loan servicers, creditors and mortgage brokers to civil liability for violations of this Act. Increases the amount of the penalty that may be awarded.
Amends the Real Estate Settlement Procedures Act of 1974 to require a transferor of loan servicing before the transfer tonotify the borrower of the status of the account and its full payment history.
Amends the Housing and Urban Development Act of 1968 to revise requirements for foreclosure prevention counseling.
Amends the Truth in Lending Act to expand from three to six years an obligor's right of rescission.
Imposes liability for monetary damages upon assignees of subprime or nontraditional loans for violations of this Act.
Sets forth a remedy in lieu of rescission for certain violations.
Prohibits mandatory arbitration.
Subjects a lender to liability for certain actions, omissions, and representations made by a mortgage broker in connection with a high-cost mortgage, a subprime mortgage, or a nontraditional mortgage.
Amends the Federal Trade Commission Act to require the federal banking agencies and the National Credit Union Administration Board each to establish a separate division of consumer affairs protection and regulations with respect to depository institutions and federal credit unions.
Authorizes appropriations to employ additional agents of the Federal Bureau of Investigation and additional dedicated prosecutors at the Department of Justice to coordinate prosecution of mortgage fraud efforts with the offices of the U.S. Attorneys.
Status of the Legislation
Latest Major Action: 12/12/2007: Referred to Senate committee. Status: Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
Points in Favor
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Points Against
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Visitor Comments
Jim C
This type of legislation should have been passed well before the nation ended up with all of these designed to fail lure loans. Now several years later this legislation is sitting there and not preventing further decay of our protection for consumers.
Brian J. Davis
This bill (S.2452) contains a provision that could potentially put thousands of appraisers out of work and add significantly to the cost of operating an appraisal business.
The Homeownership Preservation and Protection Act, would require residential real estate appraisers to carry a bond.
According to estimates provided to the Appraisal Institute from leading insurance providers, the bonding provision in S. 2452 would result in $10,000 to $40,000 in annual out-of-pocket expenses per appraiser.
Additionally, S. 2452 establishes that appraisers owe homebuyers a duty of good faith and fair dealing, which would expose appraisers to lawsuits. The appraisal profession must unite to prevent these provisions from being enacted into law!
http://tinyurl.com/633cww
Dan Whitworth
Bill #S.2452 is yet another attempt by the banking lobby to shed all of their liability onto the backs of appraisers! Independent appraisers are always the scapegoats for the errors produced and propogated by the sales side of the lending institutions. If congress (once & for all) wants to protect home ownership & it's preservation, then it needs to lay the sort of liability (bonding)at the doorstep of the problems origination; preditory & commission seeking loan originators. Appraisers have been held culpable for their actions since inception of USAP... not to mention licensing. It's time to help independent & non-bias appraisers practice their profession and help this from reoccurring agin. Not to make the profession so costly that it drives us (finacially) out of business! As stated earlier,the appraisal profession must unit and contact your state representatives to prevent these provisions for violating USPAP, and driving all the honest appraisers out of business!
R. Scott Whaley
I am a real estate appraiser in Knxville, TN and I am totally against Bill #S.2452 as it would require appraisers to be bonded. This would be a costly expense for many self employed appraisers all across the United State and will force many of us out of business. Lenders are pressuring us to lower our fees already and our expenses are going up everday with the cost of fuel.
Jose L. Camacho
I am an appraiser for over 20 years in MA (member of the Appraisal Institute.)I am against Bill # S.2452 which has a provision that would require appraisers to carry a Bond. It wuill drive good appraisers out of business and make banks and the management companies richest.
Joe M Quinteros
Another attempt to drive appraisers out of business. Appraisal Management Companies take the bulk of the business, 30-50% of the fee and have none of the expenses, education or experience requirements an appraiser must meet. I am against Bill # S.2452. The entire appraisal industry is being blamed for a few bad fraudulant appraisers (less than 1%). We are not influenced by commissions. We recieve the same fee know matter what the value is. The wrong group is being targeted. Why is that so difficult to understand? The only way for us to stay in business to raise our fees, which will be passed on to the consumer..or the good appraisers will leave the business and that ugly 1% will floursh. Good luck to the industry...it's on it's last leg.
Greg Abell
Bonding is a meritless solution. An appraisal is not science - it is opinion. The marketplace in and of itself does not reflect less than 10% variation. How can appraiser reasonably be held to a higher level of precision. Eliminate lender pressure and other issues of appraiser independence. That is the solution.
Mike Pritchard
Why not make the lender financially responsibe for the loan for 5 years, that would give the lenders incentive to make sure it is a good loan and an honest appraisal, "or am i missing something here?"
Daniel L. Johnson
Why can't anyone see that the commissioned loan officers are the problem. Why not bond them. All they care about is their commission. If they had to work for a fee, they would want a fair appraisal from an experienced educated appraiser. I and many other appraisers will be out of business if we become bonded and AMC's take 30-50% of the fees.
WILLIAM KEENAN
Iam a certified appraiser in Virginia and am against the provisions of 2452 due to the bonding requirement. As a whole most appraisers are honest and reliable and have built up a great relationship with our lending clients. The larger lenders have allowed the use of AVM's and BPO's in order to speed up the delivery of appraisals but these products have had the most detrimental effect on the appraisal industry. Adding new fees and seeing our income reduced by AMC's will only drive the most highly qualified appraisers out of business.
Carlos Cevallos
This unfair proposal targets the individuals who can least afford it, us, the appraaisers. How can this even sound fair? The responsible for the AVM's and BPO's are the ones that shoud be held accountable and responsible.
N Lindley
I am an appraiser in California and have been for many years. I already carry hundreds of thousands of dollars in E&O Insurance. The bond requirement does not make sense and is a costly expense when our field is already rife with costs and our income dramatically declining. This legislation will lead to many more experienced and ethical appraisers leaving the field for alternate careers.
Margie P
I have been in RE appraising since 1992. Have had to carry E & O insurance. I have to sign the appraisal report. Now they want to make me carry a bond, which will cost me $10,000 to $40,000. This is totally ridculous. The senators sponsoring this bill should get more information and learn what is really going on out there in the real estate world. Your advisors are giving you faulty information. If you continue with this, everyone involved in real estate financing should be required to carry a bond, realtors, brokers, loan officers, mortgage brokers. That is only fair, right? Stand back!! because now you will hear the uproar and protest. Woe to appraisers if this passes. Don't you have better things to get involved with? Like oil exploration, taxes,
Alan McCrank
The creator of this provision has no idea what a day in the life of an appraiser is like. Appraising is declining due to provisions that lack on the banking and mortgage side of the fence not on the appraisal side. Corruption begins at the top not at the bottom.
I agree with Brian J. Davis when he states this
"Additionally, S. 2452 establishes that appraisers owe homebuyers a duty of good faith and fair dealing, which would expose appraisers to lawsuits. The appraisal profession must unite to prevent these provisions from being enacted into law!"
Who makes the biggest percentage of the economic pie, 1. Banks, 2.Mortgage Brokers, 3. Realtors and finally a tiny fee of $300 for the appraiser which it typically split by the house between the company and the appraiser.
Purpose is better served where it hurts the most economically.
Who said you can't steal more with a pen than with a gun.
Gregory Hartley
The bonding provision is, on its face, preposterous. It is inconceivable that Sen. Dodd can look himself in the mirror each morning after proposing such a ludicrous measure? I carry $1 million in E & O insurance for this very reason. I cannot afford to buy a bond for the aggregate amount of the properties I appraise each year and I don't know many appraisers who can, honest or otherwise. I thought this provision had been defeated but it does not look like it has. My solution, as proposed to my senator, is to license and regulate loan originators to the same extent that appraisers are regulated. Testing, continuing education, E & O insurance, signed certifications, the whole schtick. No exemptions and no grandfather clauses. Those folks have had the candy store open to them for way too long. Please help me by asking your senators to support a lender licensing act. It is the only way, in my opinion, to get the gorilla off our back.
john
Appraisers income lucky to be 40K yr. How can they spend 10K to 40K as reported by appraisalscoop.com to stay in business. Our Senators should be bonded for 40K to keep their jobs and that amount come from their salary without an increase in pay to cover it.Understand how many tens of thousands of people nationwide they will be sending to the welfare line because they can not afford insurance. People can not afford to buy health insurance or save for retierment and another bill comes up forcing more people out of work. There are better issues to deal with. Why is your solution to the problem to hurt the appraiser. All the talk is the appraiser and many times you are wrong. Look at the real issues, who created the problem, solve it there don't attack the lower paid player and kill them which is what you are doing.
A. Professional Appraiser
This legislation contains language which is already addressed in USPAP and therefore is repetitive in nature. Some of the items under the appraiser section should be addressed in the lender section. The bond requirement for the appraiser is not reasonable. Do lenders have to post bonds? Do attorneys closing the sales have to post bonds? Do real estate listing or sales agents have to post bonds? Do developers, builders, and other contractors for residential property have to post bonds? Why should appraisers have to post bonds if these other professionals who are party to the transactions the appraisers are REQUIRED by the government to service, have to post bonds. This legislation unfairly singles out appraisers, limits their ability to practice their trade, and stifles free market participation.
Glenn Forsyth
Appraiser's are the most important cog in the wheel of protection for homeowner's and we are treated like dirt. Our fees already do not match our responsibility. IF we are to take on these added expenses then we also need to be compensated. Still, after all the talk about lender pressure in the news. Even yesterday a lender tried to pressure me with gorilla tactics. Lender control is primary, instead we are beating down the good appraisers.
Kim B.
The AMC's already take the Appraisers "fair" share of the appraisal fee and now you want us to pay over $10,000 for a bond on a $40,000/yr income? Walk a mile in my shoe's and then tell me this is a good idea!
Chris D.
Chris Dodd who sponsored this bill is chairman of the Senate Banking Committee. The banks (who contribute heavily to Dodd) have been trying to put appraisers our of business for years and this is their chance. Read the bill. In it, the definition of an appraiser is "a person" not an AVM. Sink the independent appraisers by forcing them to be bonded and the banks and AMCs gain control of what's left of the appraisal industry. Chris is a genius.
Pamela W.
Congress, with all due respect, please stop blaming appraisers for everything that goes wrong in the banking industry. We are hardworking, tax-paying Americans and we can't take any more of this scapegoating. We are not the culprits here. Yes, the consumer needs to be protected, but S.2452 is an unnecessary provision designed to over-burden the appraisal profession and ultimately bring it to complete ruin. Remember that we are homeowners also who purchase and refinance homes. We know what it's like to have a 'bad loan', too. Don't destroy our profession with S.2452.
Anna Weber
Being a California appraiser for 23 years, I already pay the highest E&O premiums in the country; survive in the most litigious state in the country; deal with the highest gas prices set by air quality standards. I've cut business and personal expenses to compete for the decreasing business caused by mortgage failures and AVMs/BPOs. I still can't believe many fly by night, get in while it's good, get out when the going gets tough mortgage brokers aren't subject to all of the regulations I’m subject to already. If this goes through you can add my name to the list of foreclosures. Bonding would put me, and all of the appraisers I know out of business, really responsible, legitimate, hard-working, and honest people. You should stress penalties on the parties that pressure appraisers (I don’t bend and have no place to report them to) and require loan brokers to perform at a higher level. If this passes how will you ever get a reliable appraisal? Appraisers will be extinct!
Tom Koikas
Truck drivers get together all over the world and protest. MILLIONS of people march in protest who are not even LEGAL in this country. Are we just that RICH that we do not care if ALL our work goes to AMC's and we have to pay a bond on top of it. I don't know about anyone else reading this in this profession, but I will not work for a grocery store clerk's wages with my experience, knowledge, and education in this field. I know plenty of closing attorneys who do not know how to read and comprihend a zoning ordinance to their clients. We better do something about this and make it a priority!!! This is our last stand. Don't you get it? Let's speak out. Talk to your dummy senators and representatives .. Send them e-mails and phone calls and letters. Set up appointments to speak with them. Talk to your appraisal organization to see what they plan on doing about this with the fees you pay them every year. If we do not do this now in 2008 .... 2009 and beyond will not be pretty!
Terry Shannon
Senator Dodd,
The appraiser bonding requirement you have proposed in S.2452 is akin to bat guano. Find another scapegoat!
Cassie Everett
This is silly! We already (or atleast a good precetage) of appraiser's already carry E&O insurance now this! Why are we taking the fall for borrowers who borrow more than they can pay. At no point in time are we provided with there finanicial information for us to make a decision on it so why are we charged with their or a lender poor decision.
Christopher Sanders
I am an Appraiser in California and with the current market we in the Real Estate market are already hurting due to lack of business. Now the washington crowd (without any regard of what this would do to the entire appraisal industry) attempts a knee-jerk proposal that is not put on the backs of any other industry. We already have laws and insurance requirements by the handful and we really don't need anymore. If they want to go after appraisers for any kind of wrongdoing there are plenty of laws on the books and we definitely don't need anymore.
B Cox
Bill S.2452 contains provision that would add high cost of operating my appraisal business. Due to AMC, lenders, and brokers demanding fee cuts plus high cost of fuel and passage of this bill, I would be out of business. In this current economic, where would I find work? Please take a closer look at all who are involved in loan/consumer protection.
Paige Hodson
S2452 will drive the only objective party in real estate transactions out of business--the real estate appraiser. We are small business people--1 or 2-man shops thay can not afford the bonding requirement. This is exactly what the banking lobby has wanted all along. Congress allowed them to skewer the appraisal industry years ago--FNMA/FHLMC created "drive-by" appraisals,lenders created no doc loans,refused to use ethical appraisers that didn't meet their numbers or were honest about properties in disrepair, applied extreme time pressure and cut fees pushing out more experienced appraisers for those that would produce fast with no "problems" (i.e. honesty) Appraisers were scapegoated for the S&L debauchle, and now for the sub-prime and other lending messes. Our problem? We are a small industry that can't effectively lobby against the banking giants. When will Congress wake up and protect the appraisal industry--those of us that exist as a check and balance on the giants.