Received from Aaron VanTrojen, Geneva Mortgage Founder & a very experienced mortgage broker:
In its entirety, this bill has the potential to devastate the mortgage lending industry and cost the home owner lending options and added fees. Contact your Senators and demand that they vote NO to H.R. 1728.
A quick review:
The bill is dangerously vague and has the potential to:
Eliminate yield spread premiums.
Mortgage companies will be forced to charge the borrower in upfront fees; up to 2% of the loan amount in origination fees. Currently mortgage companies can offer “no points” options.
Consumers will pay more for mortgages with fewer options.
Mandate lenders to hold a 5% stake in mortgages funded.
could eliminate most if not all mortgage brokers and bankers. Brokers and bankers currently employ seasoned loan officers that can offer the most competitive products and rates to consumers. Most lending institutions do not have the liquidity to carry a 5% stake in the mortgages they lend on. This will greatly reduce consumers’ options to shop for the best mortgage programs and rates. It will also be very difficult to regulate and make the industry even less efficient. Mortgage companies already have a stake in the mortgages they fund through representations and responsibilities to investors.
Eliminate your ability to sell your property through creative financing options. This bill has the potential to make illegal, owner carry backs, lease options, and owner financing.
Eliminate reduced documentation options for self employed borrowers.
Stated income and reduced documentation loans have already been eliminated; as you know if you are self employed and have applied for a mortgage in the last year or so. The possibility of a “make sense” option for self employed borrowers to be created would be unlikely; leaving a large segment of the population unable to obtain financing, regardless of credit score and history.
Please take action now. If it passes, it will be hard to ever get your options/rights as a consumer back. Email me with any questions or concerns. – firstname.lastname@example.org