I continue to receive daily updates on the legal battles and legislative maneuvers being stimulated by our current mortgage industry correction.  I am a bit disturbed about the fact that all of the blame seems to rest on those who are on the front lines of the mortgage industry.  Are mortgage professionals just inherently evil?  Are we so desperate to fund our lifestyles that no borrower is safe from our unjust and deceptive ways?  What about the lenders who push their programs down our throats and turn blind eyes to certain underwriting details that should be blatant red flags?  Is not the whole mortgage process - legislated or not - already inundated with checks and balances that should police itself and sift the good loan from the bad?  Yes, in my opinion, the system is in place, but when you have large investors clamoring to get their hands on billions of dollars of high-yield loan pools, large wall-street underwriters pushing the packages of these pools and national mortgage lenders who are thirstily attempting to supply the demand, then the system goes awry. 

I believe whole heartedly in the trickle-down theory.  When a company is run by a leadership who is dedicated to morality, to integrity, to a code of positivity, it trickles down into the ranks and permeates everything that a company is and does.  Likewise, the opposite is true.  Now, let's take a real look at those evil mortgage brokers who are on the front lines of producing what the lenders are asking for.  Are we really evil?  Or are we simply an extension of that which is trickling down from the highest echelons of the financial industry? 

Granted, I am for educated loan originators - I've been an uneducated one, and it got me in trouble.  I didn't quit though.  I chose to learn from my mistakes and move on.  Now, I am one of a few truly qualified specialists in my field.  And, as such a specialist, I am really not very challenged by all of the new proposed legislation and regulation that is being aimed at all of us evil mortgage professionals.  However, I feel provoked by the fact that we have become the scapegoat of a much larger evil, and it's a shame that we must bare the brunt of our industry's failure to operate according to the very well established guidelines that have taken competitive mortgages out of the hands of bankers and put them into the hands of specialists who can offer a plethora of options for a qualified client.

Anyway, enough ranting for today, I am posting some information recently relieved from Buckley Kolar, LLP - do with it as you will.

Dodd Introduces Anti-Predatory Lending Bill. On December 12, Senate Banking Committee Chairman Chris Dodd (D – CT) introduced the “Homeownership Preservation and Protection Act of 2007” (bill number not yet assigned), which, if enacted, would dramatically alter federal regulation of the mortgage industry. Among the many changes would be (i) expanding the loans covered by the Home Ownership and Equity Protection Act (HOEPA) and prohibiting, among other things, prepayment penalties, balloon payments, and yield-spread premiums in connection with these loans; (ii) defining “subprime” and “nontraditional” mortgages and imposing heightened consumer protection measures on these loans, such as a maximum debt-to-income ratio of 45% and a net tangible benefit requirement; (iii) making mortgage brokers liable for violations of the Truth in Lending Act (TILA); (iv) increasing maximum statutory damages under TILA to $5,000 and maximum class action damages to the lesser of 1% of net worth or $5 million; (v) imposing a fiduciary obligation and a duty of good faith and fair dealing on mortgage brokers; (vi) prohibiting “steering” to more expensive loans; (vii) restricting use of yield-spread premiums for all loans; and (viii) imposing a duty of good faith and fair dealing on appraisers and servicers. The Senate Banking Committee has not yet scheduled a hearing for H.R. 3915, the anti-predatory lending bill recently passed by the House (reported in the November 16, 2007 issue of InfoBytes). For the Banking Committee press release, please see http://banking.senate.gov/index.cfm?Fuseaction=Articles.Detail&Article_id=224. For a copy of the bill, please contact InfoBytes@BuckleyKolar.com.

Until next time - feel free to peruse my site - www.TheEquityExperts.com

Sincerely,

Brandon Thienes