How People Voted
 |
 |
22% For, 78% Against
Take Action
  |
Alert Your Friends and Colleagues |
  |
Write Your Representative in Congress |
| Save & Share | |
 |
del.icio.us |
 |
Digg |
 |
|
 |
|
 |
|
 |
Yahoo! |
H.R. 3915, The Mortgage Reform and Anti-Predatory Lending Act of 2007
- This item is from the 110th Congress (2007-2008) and is no longer current. Comments, voting, and wiki editing have been disabled, and the cost/savings estimate has been frozen.
Version saved on November 10, 2007, 18:33:29, by webmaster:
H.R. 3915 would amend the Truth in Lending Act to reform consumer mortgage practices and provide accountability for such practices, to establish licensing and registration requirements for residential mortgage originators, to provide certain minimum standards for consumer mortgage loans.
Detailed Summary
Mortgage Reform and Anti-Predatory Lending Act of 2007 -- Amends the Truth in Lending Act to set forth a duty of care standard for residential mortgage loan originations.
Prohibits steering incentives to mortgage originators, including incentive compensation and any yield spread premium based on, or varying with, the terms of a residential mortgage loan.
Directs the Secretary of Housing and Urban Development and other specified federal banking regulatory agencies to prescribe jointly regulations to prohibit mortgage originators from steering any consumer to a residential mortgage loan that is not in the consumer's interest (loans with predatory characteristics).
Sets forth licensing and registration requirements for mortgage originators.
Sets forth minimum repayment standards for residential mortgage loans. Requires creditors to determine, based on verified and documented information, that a consumer has a reasonable ability to repay the loan, according to its terms, and all applicable taxes, insurance, and assessments.
Prohibits creditors from extending credit for residential mortgage loans that involve refinancing of a prior residential mortgage loan unless the creditor determines that refinancing provides a net tangible benefit to the consumer.
Subjects assignees and securitizers to liability for certain violations in connection with residential mortgage loans.
Sets forth defenses to foreclosure.
Proscribes certain practices, including: (1) certain prepayment penalties; (2) single premium credit insurance; (3) mandatory use of arbitration; and (4) negative amortization mortgages.
Redefines high-cost mortgages. Prohibits balloon payments for such mortgages.
Revises requirements governing prepayment penalties. Prohibits lending without due regard to repayment ability.
Prohibits certain creditor practices with respect to high-cost mortgages, including: (1) recommending default on an existing loan or other debt before and in connection with closing of a high-cost mortgage that refinances all or any portion of such existing loan or debt; (2) imposing late fees except according to specified requirements; (3) exercising sole discretion to accelerate indebtedness; (4) financing points and fees; (4) structuring certain transactions and reciprocal arrangements to evade the requirements and prohibitions of this Act; and (5) charging certain modification or deferral fees, and fees for notification of payoff information.
Requires pre-loan counseling.
Status of the Legislation
Latest Major Action: 11/9/2007: Placed on the Union Calendar, Calendar No. 272.
Points in Favor
(Log in to edit the wiki and be the first to show why the bill should pass!)
Points Against
(Log in to edit the wiki and be the first to show why the bill should not pass!)
Cost per :
Learn More
RSS Feeds for This Bill
Keep yourself updated on user contributions and debates about this bill! (Learn more about RSS.)
Visitor Comments
Jerry
October 24, 2007, 11:18am (report abuse)I like the fact that this bill impacts all lenders nationally and may eliminate many states from needing to pass their own mortgage reform bill. I do not like the fact that prime no income documentation loans will all but go away. As a mortgage banker there are many legitimate needs for these loans. I agree with it on "sub-prime" only. The rescission provision on foreclosure is unclear (at least to me) in what its intent and what it allows and how it safe guards aagainst abuse. The bill does not include the NCUA in the group that will jointly prescribe regualtions. Credit Unions should have their voice heard in that process.
Brian Wallace
November 1, 2007, 1:01pm (report abuse)This bill is ridiculous. It is a knee-jerk reaction to the credit crisis. If Congress is interested in putting even more people out of business and making home ownership more difficult than they will succeed by passing this nonsense. How will a self-employed small business owner buy a home without stated income programs or bank statement programs? There are 52,000 mortgage companies nationally that originate 65% of this country's mortgage loans. In effect, this bill will put them out of business as well as the thousands of wholesale lender employees that service this market due to YSP elimination. Brokers will have to start charging customers up-front for origination instead of allowing the lender to pay some of the expense of closing, how many deals will die because a customer doesn't have the cash to close due to this law?Why does Congress try to make things worse for an already crumbling real estate market?
Michael D Ross
November 1, 2007, 1:59pm (report abuse)This is another huge wiff by the govenrment. What a bunch of ass holes. They are effectively displacing thousands of brokers and bankers. Stated loans will dissapear, which means you wont be able to buy a home anymore, if you aren't willing to get robbed by the govenrment for your tax dollars. People will move to buy houses directly from private sellers who will do it under the table. More people will get screwed. This is such a horrible move.
Consumer Mortgage Reports
November 1, 2007, 5:50pm (report abuse)Please goto http://www.consumermortgagereports.com/no-on-hr-3915-this-is-not-consumer-f... />
and sign the petition if you do not agree with HR 3915!
Nelson Rosado
November 1, 2007, 5:57pm (report abuse)This is an example of a knee jerk reaction by clueless politicians pandering to the emotions of the ignorant masses rather than actually appying logic and common sense to an issue. This will only serve to exacerbate the problem rather than solve it. A lot of people will lose jobs and many will be unable to qualify for loans if this becomes law. Mortgages will once again become available only for what politicians like to refer to as "the privileged" (the evil rich people who pay most of the taxes that fund their pet projects). Home ownership will actually decrease and wreck the economy. It ain't broke! Don't fix it!
Jeff
November 1, 2007, 7:46pm (report abuse)There are many reforms that would benefit the current housing debacle, but cutting the legs out from under Mortgage Brokers isn't on eof them. We work just as hard as Realtors, sometimes harder, on gettign a buyer into a home. We are already limited to what we can make yet Realtors can make up to 10% in commission for showing someone a home. That's right, up to 10%!! To take away YSP and leave us with a potential earning of 1-2% will put hundreds of thousands out of work. These people own homes that could end up in foreclosure along with all the others that are hitting the market. What good is the going to do? This bill has redeeming qualities, but as a whole, is completely out of line!
Ronnie
November 1, 2007, 10:50pm (report abuse)Very typical of the United States Government to come in after something negative has taken place and do what they can to make it worse. These flippin freaks need to conentrate on bigger problems and leave the clean up to the banks themselves. Many people will be affected, including myself as a licensed originator and my family, if this bill get through. The passing of this bill would require another huge front end cost to be added to an already high cost of doing business and consumers will ultimately lose more. There are some good points regarding penalties and predatory lending, but taking away YSP is absurd.
Skeptical
November 2, 2007, 11:41am (report abuse)Please, if aYSP truly represented the "value" provided by a broker for their services, then every single one would have no problem disclosing to the borrower every dollar earned on the loan (front and back end). I mean, if the service is truly worth it, then the borrower wouldn't object to a 5-figure fee for pushing paper around, especially since they're the ones paying for it, right?
The only reason this is so frightening to brokers is that they know they're earning piles of money for nothing more than aggressive sales and little, actual productive work.
Peter (vootz@hotmail.com)
November 2, 2007, 12:08pm (report abuse)Yet another way the the United States LLC..I mean the Federal Reserve...I mean the destructive monopoly of the centralized private banking community that has taken it upon themselves to slowly but surely rewrite our US Constitution and way of life has now managed to attempt to essentially elbow out mortgage companies. Most mortgage originators did consumers a great service by helping to provide loans best suited for their consumers. Ultimately, consumers will be limited to the use of a select few banks/lenders for their financing needs. What happenned to free enterprise and trade competition?? Lets just give more power to our centralized banking system. The government and its legs(the Fed)is steadily chipping away at the resources consumers have. Oh, and I love that the enabling and supervision of a 'qualified nationwide registration regime' with unique identifiers for originators. "for the people, by the people" has been lost somewhere in time. The Fed is in total control.
anti-skeptical
November 2, 2007, 12:38pm (report abuse)the 'value' of YSP? What kind of Jackass are you?! Name one other industry where the salesperson has to show you exactly how much money the company is making? The only reason realtors get away with it is because there is honor among theives and they all stick to their high fee program. YSP allows brokers to compete against each other in a free market, just like anyone else selling a service or product for profit. Yeah, the gallon of milk at the grocery shows the store's profit margin right on the side of the carton.
Nancy Keniston
November 2, 2007, 12:52pm (report abuse)This is another attempt to put mortgage brokers out of business and eliminate competition for the banks. The issue with the market was NOT caused by mtg broker, but a whole host of issues. How about credit card co's being able to issue a credit card without you authorizing it because they sent you junk mail and you did not send it back saying you didn't want the card!! AND that they give high limit cards out like candy, then jack the rate putting the borrowers in deeper and deeper. Maybe the consumer wouldn't be in mortgage trouble if the CC Co's stopped. Or how about the loss of jobs due to moving our businesses over seas? How about buying AMERICAN Only!! Lastly, hold the media accountable for a change. "Self fulfilling Prophecy" come to mind for anyone?!?
Peter
November 2, 2007, 1:30pm (report abuse)Mortgage brokers are direct competition for lenders (or at least in the capacity of wholesale lending). Realtors, car dealers, etc, do not directly affect the lending of money. If Mortgage brokers go out of business, wholesale lending departments accross the country will close...many banks/lenders will subsequently fold, leaving only a select few powerful centralized banks in place to conduct business as they see fit. unemployed people everywhere...new lending guidlines would have to be effected...this would be catastrophic for people and the economy. What are they thinking???
Mike
November 2, 2007, 1:32pm (report abuse)Skeptical
What do you do? Does your company disclose to its clients the amount of profit it made?
Anti-skeptical and Nancy know the real deal. Today I'm offering 6%, Bank of America is offering 6.5%. On a $220k deal, BOA will make $3700 more and do not have to disclose it. I do.
Wake up and make sense, do some research.
Skeptical
November 2, 2007, 1:45pm (report abuse)Ahh, such enlightenment on display, what with the name-calling and all.
As for disclosing the fees, no other industry or product piggybacks the salesman's commission onto an unsuspecting borrower for years to come. Like I said, if you feel you're earning a "fair" fee, why are you afraid of disclosing it?
As for me, I was in the industry but am now elsewhere in the financial world. I left because the entire setup is geared towards bilking the unsuspecting for a minimal amount of work. If you really think earning a 5-figure for pushing paper is moral & ethical, then there's a used car industry waiting for you once Congress outlaws all of the current practices.
Peter
November 2, 2007, 2:11pm (report abuse)Skeptical...what do you do for a living?? Do you sell over priced life or health insurance? Do you take peoples money and place it in poorly managed mutual funds, deteriorating 401k plans, or stocks? Do you work for a credit card company that bombards consumers with agreement revisions after they have drawn credit? Are these people or organizations required to openly disclose their profits?? Everyone that is employed within the financial realm makes a living based on the "promise to pay" principle and the commissions or profits associated are not disclosed with the exception of mortgage brokers. We, as mortgage brokers have had to disclose our fees for quite a while already (at least in my state) This bill is limiting the capacity in which mortgage professionals can operate and can severely affect YOU OR YOUR FAMILIES ability to qualify and interest rate available to you on a residential home mortgage years from now.
Skeptical
November 2, 2007, 2:19pm (report abuse)I deal in a segment of equipment finance, which has a lot of competition. That means there's no opportunity to inflate rates/charges. Fees are in the 1-3% range, so it's a volume business.
These new laws do not affect traditional borrowers that save & borrow on traditional percentages. They do, however, discourage speculative real estate investment which serves only to inflate market prices (and broker fees). That becomes it's own barrier to new borrowers.
I do appreciate your concern for my financial health, though. Rest assured, though, we paid for our farm in cash and our new house has better than 50% equity in. I'm not worried about these changes, but they'll alleviate alot of headaches for folks who were sold loans that were totally inappropriate for their financial situation.
Wow what a Skeptical Joke!
November 2, 2007, 2:56pm (report abuse)I personally have never read such garbage.
Hey Skeptical, I think I am now skeptical if you were ever in the business or have any clue what you are even talking about!
Thanks for your helpful input on this matter and by the way why don't you keep financing your equipment and making you big bucks so you can buy everything in cash... and avoid trying to comprehend the meaning of any of this bill. Obviously, you are a step above all of us!
Kill The Preadators...
November 2, 2007, 3:13pm (report abuse)Not the Industry! It has been a tough two years in the industry and this bill is good besided the elimination of the YSP. The YSP is not preadatory....it allows banks and brokers to compete with one another on an open market to earn the customers loan. Last time I checked we lived in America in an open.."free" market. I thought communism fell with the wall?? This is an example of the government reacting without thinking and if the YSP portion of this bill passes...this could very well start another great depression by putting untold thousands of industry workers on the street.
kevin p. a mortgage professional
November 2, 2007, 5:57pm (report abuse)Did the brokers simply sell the loan programs THE BANKS created to maximize THE BANKS PROFIT? Can you not figure that when the bank had so much to profit from these sleazy loans that of course the bank made it lucrative to sell them to the consumers! All the brokers that “embraced” those loan products were the banks PAWNS. So if the banks created the programs, why are we focusing on the brokers? Would you “kill the messenger” just because you didn’t like the message? Or would you go after the person that wrote the offending message? I’m sorry, but this BILL is KILLING the MESSENGER!
Kevin p. continued
November 2, 2007, 6:00pm (report abuse)And to reply to “skeptical” remarks:
You said:
“The only reason this is so frightening to brokers is that they know they're earning piles of money for nothing more than aggressive sales and little, actual productive work.”
My answer is:
“you have never walked in my shoes and you sound idiotic to the people who really do work hard in this industry. Idiotic is not a slanderous word, it is purely descriptive.”
kevin p continued
November 2, 2007, 6:01pm (report abuse)You also said:
“Ahh, such enlightenment on display, what with the name-calling and all.”
My response:
“You are correct, there is no need for such childish “knee jerk” comments…shame on “anti-skeptical” for calling you a name. And just as the actual mortgage brokers did not create the horrible loan products that have been sold to the consumers, congress should not “knee jerk” and attack the brokers jobs when the root of these evil loans was the greedy banks that designed the sleazy loan products in the 1st place. I’m not an expert, But I think the banking division of the gov’t had to approve such risky loans programs to begin with, or they would not have ever been allowed to be sold in the 1st place.”
kevin p
November 2, 2007, 6:03pm (report abuse)The overall desired effect of this bill is positive, but some SPECIFIC VERBAGE in the bill makes it illegal for banks to pay direct compensation to mortgage brokers for the job we do. (this is called YSP or Yield Spread Premiums)
(The bill also makes it illegal for any borrower to roll the normal fees associated with a loan into the transaction! This will force normal folk’s to spend an average of 4k~6k) of their saved or invested money just to refinance or they will be stuck with their current loan no matter how bad that loan is!
kevin p
November 2, 2007, 6:03pm (report abuse)(Example- a person got tricked into taking a Pay Option ARM with a low one month teaser rate by a sleazy mortgage person 8 months ago. Now, they are stuck in a loan with a much higher than fair market rate / payment and they want to get out of it. BUT now this bill will eliminate the jobs of the sleazy brokers AND the ethical professional mortgage brokers too! When the customer finally does find a way to refinance out of that bad loan, this bill makes it illegal to roll any of the cost into the new loan, and it forces them to bring thousands of dollars in CASH (if they can) just to improve the poor choice they made on the last loan. (by the way… the there is over a trillion dollars of adjustable loans that are going to “start adjusting” in the next 12 month alone… this bill will destroy all of those peoples opportunities to move into stable loan programs)
kevin p
November 2, 2007, 6:04pm (report abuse)This scenario I just illustrated could bring the housing economy to its knees, as the average homeowner cannot write a check for 4000.00+ to cover the average costs (even with out YSP) so they can take advantage of an improved interest rate or prevent their payment from skyrocketing.
-we ethical mortgage brokers do want the "sleazy brokers" to be shut down...I am all for legislation that improves this industry! I’ve found is very hard to sell “reality for a borrowers situation” against the competitor when they are “selling fiction”...
Instead of fixing the issue, this bill just shuts down ALL BROKERS and hurts the consumers ability to "better" their loan or even buy a new house unless they can spend major cash out of pocket...
-THIS IS BECAUE THIS BILL ELIMINATES YSP (direct compensation PAID from the bank to the broker)
kevin p
November 2, 2007, 6:06pm (report abuse). The company I work for does "no closing cost loans" as our primary business model. - we don't charge the customer a nickel when they purchase a home or refinance into a lower their rate because the market is better, need to take cash out, or even change loan programs! Without YSP this is not possible!
(example – someone has a adjustable rate loan and wants to move it to a fixed rate before the payment adjust upwards (a 300k loan at 5.00% adjusting up to 7.5% is a 487.64 increase per month! We are seeing this example every day). With this bill the borrower will be forced to pull thousands of dollars off the "street" essentially crippling the economy in the process. (The only way a person can spend 5000.00 is to: pull cash out from their investment portfolios which pulls dollars out of major industry, spend less on luxury items like clothes and consumables… this again hurts the economy, put off that vacation or home improvement… economy still suffers, etc)
kevin p
November 2, 2007, 6:06pm (report abuse)If these people cannot come up with the cost to pay for the new loan and they can’t afford the higher monthly payment increase they be forced into foreclosure. The economy will still crumble!
The HR3915 Bill forces them to choose:
spend 4-6k cash to refi their current adjustable loan, or eat a 500.00 payment increase!
FWIW – when someone’s house payment goes up 500.00 a month than just took 500.00 of discretionary money off the streets of our economy…so if all us mortgage brokers lose our jobs now, and they get stuck in their loans the economy still crumbles.
If these people cannot come up with the cost to pay for the new loan and they can’t afford the higher monthly payment increase they be forced into foreclosure. The economy will still crumble!
This Bill is the type of event that can unexpectedly collapse our currently fragile housing market and potentially send the entire economy into a recession.
kevin p
November 2, 2007, 6:08pm (report abuse)Here’s a thought! Why write a 66 page bill to reform the industry when we just need to outlaw the offending loan programs! Pay option arms are junk! They maximize the banks profits and of course the bank will “pay more” to the broker that will sell his customer out for more money. Let’s just “outlaw” the bad loan program… I’VE NEVER KNOW A BROKER THAT WRITES THE 250K CHECK AT A CLOSING TO FINANCE A LOAN. The banks know what they were selling, and they are the one’s that should be “worried” about their future.
If a TV manufacturer built and inferior product… you bought it and was upset, is it the sales guys fault? He’s just selling the product the MANUFACTURER offered; it’s your job as the consumer to research a products features, options, and fallacies. Why do so many Americans “research a TV purchase for weeks, but risk their biggest asset on mortgage that “looks way too good to be true” –with little or no research?
kevin p
November 2, 2007, 6:10pm (report abuse)So Skeptical… I ponder you this: if this bill does pass and all of us “overpaid paper pushers” are out looking for lucrative jobs to pay for our luxury lifestyles, why what keeps us from crashing into your line of work and “overpopulating” your industry and there by driving profit margins in your field down to cut throat levels? You stated that you work off of volume and only make 1-3%. That’s great! Because anybody that’s good with a calculator will know that the average broker is doing great to net 0.125% profit for themselves average on the loans they write… your just thinking we are making too much because our volume is in the billions of dollars a year… please reconsider your stance an this bill as the long term impact it could have on this nation cannot be overlooked no matter how bad you hate the mortgage brokers.
kevin p
November 2, 2007, 6:10pm (report abuse)(btw – why would you have left such an “easy money, no working, paper pushing 5 figure job? Then you attacked the used car industry… is the used car sales guy to blame? Or was it the previous owner that thrashed the car before they traded it in? do you think the sales guy is just the middle man? Or the does the every trade in work perfectly, and the sales guy’s purposely break the cars so they can laugh at you as you pull off the lot?
I’m sure you think it’s the government’s job to pay for your health care too?
-done
reality check
November 2, 2007, 10:46pm (report abuse)I think its unfortunate how the incentive system is set up under the YSP system. Lenders are motivated to push out these option arms for continual business. This bill does no justice for reform but I have seen more than enough brokers exploit the YSP system to put people in loans they probably didn't want given what they really wanted. I wonder if lenders gave incentives to brokers to put people in loans they could pay if that system would be both good for consumers and brokers. Ah perhaps a pipedream or maybe I'm just talking about how insurance is sold these days. :|
MIKE
November 3, 2007, 3:31am (report abuse)Here is a question for you all. Do you fell this bill we be passed or amended?
Pete
November 3, 2007, 11:49am (report abuse)Well said Kevin. Yes, there are "sleazy" brokers that doctor loans and "steer" consumers into loans that they truly cant afford for long AND there are good brokers that really do consumers justice, but BANKS are to blame for "manufacturing" the teaser and hurtful loans to begin with. The average joe wants a remedy...Human nature requires a finger to be pointed...who better at than the "salesperson" or broker that pushed these loans. Consumers want protection and the government will be SURE to give it to them. Smoke and mirrors...slight of hand. Consumers will be looking at one hand not paying attention to the other. And they will not see the true nature of how this bill will impact our already fragile economy. The Fed knows exactly what they are doing.
Peter
November 3, 2007, 11:58am (report abuse)It would make more economic sense to simply increase YSP to brokers on 30 year fixed rate loans and minimize YSP on other arm programs or simply eliminate those types of loans altogether. We would still have free enterprise and more stability in the homes sector. But it really doesnt seem the government or better yet the Fed which truly does have more leverage than the government itself wants more stability. Lets start paying a little attention to the "other" hand. The american dream of home ownership is slowly turning inot a pipe dream.
Peter
November 3, 2007, 12:07pm (report abuse)Or, wouldnt it make more economic sense to simply try and pass a Mortgage Amnesty Act that would roll back rates and modify the Notes for all people in foreclosure nationwide. Easier said than done I'm sure, but that would create much more economic stability. But of course, the governement would rather have a ton of homeless people in this country, hungry and looking for shelter and help that they will address shortly after they're done building shelters and military bases in other parts of the world...
Trace
November 3, 2007, 5:22pm (report abuse)HR 3915 Information and Resources
This bill is serious business and signing a petition is not enough considering the severe conequences such legislation could have on Mortgage Brokers and Consumers.
Do you have Congressional Contact Information? Post it!
Do you have other information on creative and effective ways to let your voice be heard? Post it!
RESOURCES:
HR 3915 News, Resources, and Information: http://www.ipagio.com/hr-3915-mortgage-reform-act.php
NAMB Teleconference Information: http://www.ipagio.com/hr-3915-namb-teleconference.html
HR 3915 Summary: http://www.ipagio.com/hr-3915-mortgage-reform-act-summary.html
HR 3915 Full Bill Text: http://www.ipagio.com/hr-3915-mortgage-reform-act-full-text.html
This is bad legislation that can have serious repercussions for mortgage brokers and more importantly consumers, do not think this can't affect you.
Thanks,
Trace.
Kristan
November 4, 2007, 1:41am (report abuse)A lot of valid information has been transpired, of which I agreee and disagree...Skeptical, especially being in the industry, I would think that you would know that a 'working farm' (and just farms in general) are difficult to finance and with the given market your value has surely gone down, as there are little to no comps available to support "your value." I feel for you on that! I also have concern for others who have purchased a house through an irresponsible broker who most likely put them in an option-arm didn't even know what they were selling! I have seen a lot of this and fraud in this area! I ask you to rethink your response regarding your property, when in all actuality most refinances and purchases are for single family homes...yes your's is, but it's a farm--Given the ltv, a decent amount of money was put down. Given the limited options,it would be very difficult for you to go to a prime lender.
Kristan
November 4, 2007, 1:52am (report abuse)Kevin P and Pete...I agree with you, however it's not the lender at fault! It's the investors-I work for a subprime lender and we underwrite to the investor's guidelines. During the inflation of 'no income' verifaction loans, Wall Street was the most agressive-lightening up on their guidelines... for subprime to make money, they must sell the loan. Wall Street was buying the majority of the loans (70%)at the time (we had 7 investors!). They profited from this new market they created! It's easy to blame the bank, but we only orignate and underwrite the loan then sell it the next month. That's how subprime makes money...not selling ysp to brokers (sometimes given the scenerio if it's a counter offer). As a lender, we are following protocal to get the loans approved under THEIR guidelines. Don't you think they should take some of the blame?
Kristan
November 4, 2007, 2:04am (report abuse)Also, I what I don't feel has addressed is that A LOT of companies in the past year have bent over backwards to meet above average expectations (including benefit, redisclosure- any changes, max ysp up front even if not charged, etc.).
Kristan
November 4, 2007, 2:05am (report abuse)Sometimes I evaluate this industry I am in...makes you think that borrower's purchasing a home should have to take some sort of educational seminar/class. Yes, most people would say they were busy or have some excuse, but if they were fully educated on what owning a home entails then would they fall prey to the "greedy broker"? Keep in mind that most if not all lenders require disclosure of both upfront and back fees.
It's easy for a broker to blame the bank, but if we didn't exist wouldn't your position be obsolete? We are just mere puppets in the investors web.
Anywaylife
November 4, 2007, 3:00pm (report abuse)Ok,, I have read about all of your comments , the yeah and the neigh..however my lender last year received all my documentation from my job in which i made 30k a year not alot.. then they went stated with $6800 a month and told me to put the loan i rec'd 30k in the bank and pay my payments and in a year i would be ok.. sure i signed the documents , but do we all know what we are signing? i cannot get a loan if my life depended on it.. my home of 6 years and 254k is now $ 2545 a month.. the lender now says. well you have lower income.. i never did and they falsafied doc's.. now what.. smart people?
Kristan Kennedy
November 4, 2007, 4:02pm (report abuse)It's unfortunate that you have been put in that situation. Did you go directly through a lender or a broker? Never ever take the equity out of your home to put in the bank an apply it back to your mortgage! My suggestion would be to find a lender who offers no ratio loans (meaning your monthly pymnts vs what you bring in every month). It's not as evil as a stated loan. Not sure what options you have pursued so if you need a few let me know. As far as the smart people...not trying to put salt in the wound, but if you weren't sure what you were signing...why did you sign it? That's half the problem. Again my apologies for you situation, as many face the same thing.
Brandy
November 4, 2007, 8:26pm (report abuse)It is lack of basic intelligence if a person relies on a broker to tell them if they can afford a payment or not. If this bill goes through, then the banks get full control. It was the banks that designed these programs in the first place. I can recall a flyer that said 560 middle credit score can go 100% stated doc, W2 wage earner. W
The borrower is hurt by relying on one bank. A good broker will know the borrowers needs, best lenders, best rates and what bank will satisfy the full financial picture , while preventing unnecessary credit inquiries. Yes, there are brokers that have given the industry a bad reputation in general, but buyers need to also make educated decisions.
darcie
November 4, 2007, 8:45pm (report abuse)this bill would put hundreds of thousands of people out of work - eliminating mortgage competition and ultimately raising rates. it would allow banks to earn yield spread yet make it illegal for brokers to do so.
EJ
November 5, 2007, 10:02am (report abuse)Anywaylife to answer your question, both you and your mortgage broker committed loan fraud. Stated income loans were not designed to just place any figure on the 1003 for qualifying purposes. The intent of a stated income loan was merely to lower doccumentation requirements for folks that had qualifying credit.
For people that could not verify sufficient income there are programs for "No Ratio" and "No Income Verification" that do not require qualifying with income analysis.
You are now in a bad situation because you chose to buy a home you probably cannot afford. Your broker sounds like the type of person who is partly responsible for the glut of foreclosures on the market.
My suggestion to you would be to sell the overpriced home and purchase something you can truely afford.
kevin p
November 5, 2007, 10:19am (report abuse)I will correct my comments. I used the term "bank" loosely when I should have said investor. to many people they seem to be the same intity, although the bank is selling the loans to the investor after the closing approx 80% of the time. thanks for pointing that out!
we still have a problem though!
this bill hurts the consumers and the competitiveness of the free market system America was founded on! please go and urge you representative to vote NO -NOW- if you have not already! make your voice heard!
Dan
November 5, 2007, 1:17pm (report abuse)After taking the time to read HR3915, it all seems much ado about nothing. If legislation is offered it should affect those who use preditory lending practices not the entire market. For those of you who believe realtors get 10 %, that is inaccurate. The typical sales commission is between 5 and 7% and is broken up 4 ways. More than just the mortgage lenders will be affected by this ill-conceived bill.
Scott
November 5, 2007, 1:47pm (report abuse)The reason this country is in this situation is greed. People feel they deserve to own a home even when it puts them in a financial mess so they do whatever it takes to get the home. Loan officers/brokers want to make as much as they can so they do the deal even if it doesn't make sense (but underwriting approved it not me). It's sickening to see some of the comments written on this 'blog'. Why can't people admit they were greedy? Blame it on the banks/investors for creating the products, but it was you who sold it and allowed the consumer to sign the documents. That's like blaming the gun manufacturers for murder. It's not who makes the product that is to blame, it's what people do with it when they have it in there posession.
Valerie Moran
November 5, 2007, 4:09pm (report abuse)I am concerned that once again Washington is attempting to legislate an industry that they do not understand. The Yield Spread Premium allows first time homebuyers the option of getting into houses, allows current homeowners seeking refinancing to concentrate funds to payoff high interest rate credit cards etc... Now is not the time to take options away from homeowners! Instead, Washington should seek to educate them. Homeowners should have the choice of whether to utilize yeilds spread or not. A disclosure should be given to homeowners presenting the loan both with and without yield spread--this makes sense--do not take away an option from homeonwers that can help them. Instead, educate them so they know how to utilize this option to their best advantage!
James in Dallas
November 5, 2007, 5:26pm (report abuse)In an Industry where the bank sends a rep to your desk everyday asking to look at your loans and then says "I have a program for this person" it makes it a little hard for the LO to turn down since the bank wants to do it and the borrower does too. Plus, did anyone I ever offered the fixed rate to accept it, NO, they wanted the lower rate, ARM. I explained that they would have to clean up their credit and refi if they wanted to do the ARM. Did they ever clean up their credit? NO. The American Public can never take the blame for their self-created problems. Blame it on the LO's that offered you a way to get into a home with little out of pocket. The average consumer messed up a great opportunity that the banks gave them.
Lets scapegoat the mortgage brokers when the real culprits are the Wall Street Investors/Banks (in it together) and the American consumer.
Also, the guy who thinks this job is paper pushing never did the volume or had any issues to overcome.
Jim
November 5, 2007, 6:17pm (report abuse)I just read through the proposal and do not think it will do a lot to curb the larger financial institutes from capturing borrowers into loans with no real possibility they can be honored successfully. I have a loan through a subsidiary of a major bank where the terms will not be covered by the bill. The anti-steering portions of the proposal do seem geared at protecting the consumer to some degree. Language regarding the institute being a regular loan institute should be dropped and any lending institute should be forbidden from these types of practices.
EJ
November 6, 2007, 11:14am (report abuse)Why don't we just outlaw profit in all businesses, then we can all say hail to chief Stalin as we slide further left into Socialism.
There is a market that is correcting itself now and it does not require more legislation from thumb sucking liberals who believe any profit is bad.
Kathy
November 6, 2007, 11:47am (report abuse)Pass HR 3915. This is what others are saying about YSP(legal bribes)bad for consumers.Yield Spread Premium an example: A buyer needs financing for $500K. He goes to a mortgage broker. The broker says he can get the buyer a mortgage at 7 1/2%. In fact, the broker has a lender who will offer 7%. The scam, and that’s EXACTLY what it is, is the 1/2% difference. The YSP (Yeild Spread Premium) is carved up by the lender and the broker.The lender,is going to collect 1/2% more for 30 years so he kicks back a big fat bonus (thousands) as a bonus to the broker who is also getting a fat fee for arranging the mortgage. Here’s the catch. The sleight of hand difference of 1/2% does NOT show up in the contract. There is NOTHING stating the actual % which WAS available was 7% but the lender and broker have gouged out another 1/2%. the buyer is not aware he will be paying 1/2% more over what he COULD have been paying, for 30 years. That will be thousands of dollars. It is legal criminal fraud.
Freediver
November 6, 2007, 12:12pm (report abuse)Regardless of what is fair or what is done in other industries makes little difference to me. The fact is that the US government is far outstepping it's bounds in passing this legislation or anything similar. "Our" government is inept at best and corrupt at worst. For anyone to beleive that the government can regualte the economy out of this crisis is utter nonsense. I challenge anyone on this forum to provide me with data which shows the government has been successful at "anything". The US is starting to look like a police state headed towards communism when the goverment has the power to regulate an entire industry out of business. Washington is full of buffoons and charletons.
Broker
November 6, 2007, 12:15pm (report abuse)I'm happy to disclose ysp all day...which we're already required to do in SC; simple fact is we can make ysp and still give lower rates than banks since they have so much overhead built into the rates they offer...huge salaries, benefits, etc. Disclosure is great...even caps on ysp, but elimination will force a lot of brokers out of business.
freedvr1
November 6, 2007, 12:17pm (report abuse)Kathy,
Obviously you have not taken economics. If the "par" rate were 7% and the broker offered you that rate he would be doing the loan for free. The par rate is the same as what a store would pay wholesale for their goods. Quite frankly if you want a "free" mortgage loan then open your own company and see how long you could keep your doors open with your philanthropic attitude. It's called "profit"!
Ned
November 6, 2007, 12:28pm (report abuse)Kathy....what if a broker uses that YS to mitigate the borrower's closing expenses? I suppose that is evil and also legal criminal fraud? What if a broker doesn't charge a fee and uses the YS to earn his money? What if a broker uses the YS to pay for ALL of the borrower's closing costs? Is that legal criminal fraud? I suppose you want every borrower to bring all the closing costs to the table and not roll any into the loan?
Ned cont.
November 6, 2007, 12:28pm (report abuse)If this bill becomes law, it will force that to happen and basically kick the last remaining leg out from under the weakening housing market. What if YS is used to pay for all of the closing costs, then three months later, you refinance the borrower again (paying all of his costs) into a lower rate, doing it for free? That is a win win for everyone. You would support eliminating the ability to do that. Yes, I am a mortgage professional and I do that all the time. 95% of my customers never pay closing costs. That is where YS comes into play. You speak from an ignorant point of view. Be careful what you wish for.....
Ned
November 6, 2007, 12:30pm (report abuse)If this bill becomes law, it will force that to happen and basically kick the last remaining leg out from under the weakening housing market. What if YS is used to pay for all of the closing costs, then three months later, you refinance the borrower again (paying all of his costs) into a lower rate, doing it for free? That is a win win for everyone. You would support eliminating the ability to do that. Yes, I am a mortgage professional and I do that all the time. 95% of my customers never pay closing costs. That is where YS comes into play. You speak from an ignorant point of view. Be careful what you wish for.....
Vote Date?
November 6, 2007, 12:49pm (report abuse)Do we know when the decision is expected or are they in the process of making amendments?
Lynn
November 6, 2007, 1:01pm (report abuse)Kathy - have you EVER seen a rate sheet? I am a broker in CA we disclose EVERYTHING! Brokered a loan to Wells Fargo at a rate of 6.00% with 0 points to my borrower. I was paid 1% YSP. Borrower was quoted by retail WF 6.125% 0 points. How much did WF make on that loan? ???? you will never know and who did better for the borrower?
keith
November 6, 2007, 1:07pm (report abuse)I am always up front with my clients. I let them know how much I am going to make on the loan and let them choose witch option they want: all on the front (raising the amount of cash needed at closing) all on the back (raises the rate) or some combination of the two. In some cases with cash strapped borrowers, we use the YSP to pay some or all of the closing costs. Is this criminal? If YSP is done away with, where will the additional funds to cover these closing costs come from? Unfortunately we live in a country where most people don’t save for there down payment or closing costs, or if they do save, they don’t want to tie all their funds up in the closing. There is no conspiracy to get the client. We are paid for a service and if the client understands how we are paid, then they have made an informed decision. The problem with the industry is not that banks or lenders pay us YSP.
Rick
November 6, 2007, 3:10pm (report abuse)Why is the government bending to the losses of Citicorp and Bank of America to mention two banks. If they put mortgage broker out of business, banks will rise their prices and not have to identify how much money or ysp they are making. The lenders created loans that were ridiculous for their own profits. Most brokers that I know are honest and hard working and very competitive with rates. Yes mortgage brokers need to make a living too. Do not condemn a whole industry for faults by the lenders and their guidelines, and some unethical brokers. I personally have worked very hard for 5 years to build my reputation with customers and realtors being competitive however making a fair profit. Dont we live in the USA. When did the rules change. I am disheartened that the bill was originated at the end of October again giving very little time for counteraction. It is not our problem to solve a problem that lenders and banks created.
Bernie Dillon
November 6, 2007, 3:20pm (report abuse)I agree that all loan officers need to be licensed. I agree that we need to disclose YSP. However this bill will cause more people not to qualify for refinance to save their homes from foreclosure, and our industry has a direct affect on title, escrow, builders, home depot, loew's, 1000's of people will be out of work!
JD
November 6, 2007, 3:27pm (report abuse)The bottom line is that the Democrats want to have some good window dressing to make it look like they are doing something about the financing crisis. The lenders guidelines are at fault for the current situation, not the brokers and their fees. Like many other posts have said, this is a free market system, if the brokers were raking people over the coals with fees and higher rates because of YSP, why didn't these people go directly to the lender for the loan. Brokers are called wholesale lending for a reason, their rates are lower than banks. Also, the banks built in the risk of doing a risky loan by increasing the rate, they should be eating their losses, instead of punishing the brokers.
Competition is Democratic
November 6, 2007, 3:34pm (report abuse)When does this VOTE go down? I thought it was today - 11/6/07?? Anyone know the results?
Craig
November 6, 2007, 3:39pm (report abuse)This bill is socialism at it's finsest. taking the free market competition out of the mortgage process is an act of lunacy and will only harm the consumer. what a bunch of career politicians, trying to put on superman capes in the middle of the real estate meltdown. another example of your tax dollars hard at work
John
November 6, 2007, 4:25pm (report abuse)I'm sick and tired of living in a society that will not hold someone accountable for their own actions. Stop pointing fingers. Everyone has a single right not to sign if they do not agree with the terms. Once again many people have abused a system put forth to help them. Lets see, after we buy a house that we clearly can't afford. Lets follow that up with a brand new car or two. Not to mention those $500.00 a month cell phone bills. Mortgage lenders or brokers are not financial planners. It is up to the borrower to make sound financial decisions for themselves. Hence living in a free country. YOU HAVE A CHOICE! I tell you what Chairman Barney Frank you have opened up a pandora's box with this one. A lot of mortgage lenders and brokers out there that are voters too. Not to metion the real estate agents, appraisers and attorneys this will effect. Where is all this compassion at when my 28 to 33 percent taxes come due? Thats what I thought. Hypocrites!
Loan Officer
November 6, 2007, 4:36pm (report abuse)I agree with JD. Also the consumer needs to be more educated. They walk into title and just sign on the dotted line. If the Mortgage industry is "So Horrible" wouldn't you know what you were getting into. Most of us are here making AN HONEST LIVING. There are those out there giving us a bad reputation. If you wanted to get a new car or TV.... wouldn't you do your homework? If you can't afford the payment, don't buy the house.
Frank
November 6, 2007, 5:23pm (report abuse)Today is the 6th...did the bill pass? Was it voted on today?
T
November 6, 2007, 5:59pm (report abuse)These are words for Skeptical. DO SOME RESEARCH!!!! The sound of it if you where in the business than you were not very good at it or you would still be in the business. If you think that being a broker is a easy job than you were not doing your job. I never have a problem disclosing my fees because I go above and beyond for my clients something it sounds like you know nothing about!!!!
Craig
November 6, 2007, 6:26pm (report abuse)nice job Kevin P, but you can't tell skeptical anything. he already knows it all. and your right, he must not have been any good at this or he would still be doing it.
Craig
November 6, 2007, 6:32pm (report abuse)anywaylife, you should have gotten a clue when they asked you to lie about your income. belly to the bar and quit whinning about your poor misfortune. you know right from wrong don't you?
Kent
November 6, 2007, 7:08pm (report abuse)Mortgage Broker and proud of it!!!!
My career has been in banking and brokering for over 20 years. The first 15 in mortgage banking the last 5 as a broker. Without any doubt I am able to provide greater service and value as a BROKER. Anyone that has worked on both sides of the fence knows that brokers can beat the banker all day long. I work very hard and deal honestly with my clients - for two reasons – first, it is the right way to treat my clients and secondly, I want them to refer their friends and family to me. You will not earn repeat business by being dishonest. Finally, I do much of my business in New York and always disclose the YSP on the HUD - I have nothing to hide. We all know that the economic value of a loan is the same whether it is originated by a banker or a broker - so the only difference is that the broker must disclose YSP.
I believe that reforms are necessary - but this completely misses the mark.
Jim
November 6, 2007, 8:14pm (report abuse)After reading the entire thread I have realized that I was almost put under by a broker when trying to buy an existing house. He tried to steer us into one of those high interest sub primes with great determination. I commented as to whether I should file for bankruptcy when I heard the terms. Originally I was told he would work for a good mortgage. Some brokers are what this law addresses. Of course my deal for steerage was way off balance and I chose not to deal with that mortgage broker any more.
Jim
November 6, 2007, 8:22pm (report abuse)Continuing onward with the adventure. We passed on the existing home and ended up purchasing a new build home at better upfront terms. No escrow, interest only, pre-payment penalty, two year teaser rate, reset after two years followed by a 6 month rate change with LIBOR plus five.
This was our first home purchase, but I believe the industry is in great need of legislation to curb these abuses of ALT-A (I believe it is the loan classification mine is under). In addition, I have a 15/30 loan at 12 % for the other 20% of purchase price.
Regulation, Regulation, Regulation, they cannot police their selves without sound regulation being imposed on the industry.
Elliot
November 6, 2007, 8:25pm (report abuse)Hey Kathy,
I will give you 7% but charge you 3 points. Do you work for free? NO? Why do you expect the mortgage professionals to? I would read up and get more educated before you post a stupid comment. Have a nice day!
Jennifer B.
November 6, 2007, 8:49pm (report abuse)I strongly urge you to stand and fight for HR 3915 to NOT pass.The cause of the fall of the Real Estate and housing market is not due to the mortgage originator. It is due to the banks whom created all of the crazy programs that allowed any and all walks of life to purchase a home without the collateral or ability to repay those loans.We here in the STATE of TX, have the best set of rules Things have definitely tightened up and that is ok, but the gov't.needs to understand that "Yes" things do need to be changed and revised but make sure that all other states disclose the YSP to the client because here in TX "We Do", IT'S THE LAW!!! I agree to make the standards tougher but not to take away the "Bread and Water" too....
crd
November 6, 2007, 10:01pm (report abuse)DID THIS STUPID BILL PASS?
Trace
November 7, 2007, 2:03am (report abuse)HR 3915 has been passed by the House Financial Services Committee. The bill will now proceed to the full House, then Senate to be voted upon before going to the President for signing. Further changes to the bill are expected. A vote is expected next week.
We will be posting information and links on the bill's effect on YSP as we get them: www.ipagio.com/hr-3915-mortgage-reform-act.php
View the Manager's Amendment Summary: www.ipagio.com/hr-3915-mortgage-reform-act-managers-amendment-summary.html<... />
View Manager's Amendment in Full: www.ipagio.com/hr-3915-mortgage-reform-act-managers-amendment.html
Not disclosing YSP?
November 7, 2007, 10:18am (report abuse)Not sure but I believe all mortgage brokers are required to disclose the YSP on the GFE. I know that it is ALWAYS on the HUD as that is how we get paid from the lender. Without it being on there we have no way of it getting it afterward so I am not exactly sure how people think that it doesn't being disclose to the borrowers.