HR 1728 – Approved by Financial Services Committee

Written By: Joan Ewing, NAMP-CALP, FHA DE Underwriter

Hello Everybody – Sorry I did not blog last week; however, I changed jobs and I was up to my ears in stuff. So now that I am on my new job and things are starting to settle down – I thought I would bring you up to date on an issue I reported on back in April regarding the Mortgage Reform and Anti-predatory Lending Bill.

I remember stating that by the time the Financial Services Committee got through dissecting the bill as presented by Barney Frank we probably would not recognize it. WOW – was I wrong!! On April 29, 2009 the House Financial Services Committee was approved. The House of Representatives is expected to consider the bill a soon as this week. The legislation approved by a vote of 49-21. It looks like there will be no stopping this bill – however, it will definitely effect the mortgage industry.

Per Representative Brad Miller (D-NC) stated that ten million American families will lose their home to foreclosure in the next four years, many of them falling out of the middle classes and into poverty. He feels that the mortgages that lead to this crisis should have never been made and he feels this can’t happen again.

The bill would ensure that mortgage lenders make loans that benefit the consumer and prohibit them from steering borrowers into higher cost loans. For mortgages refinancing, the bill requires that all loans provide a net tangible benefit to the consumer. Also, it would make the secondary mortgage market responsible for complying with these standards when they buy loans.

Lenders and secondary mortgage market who don’t comply with these standards would be held accountable by consumers for recession of the loan and the consumer’s costs for recession, including attorney’s fees. They would have the option to rework a loan to conform to the bill’s standards within 90 days of receiving notice from the consumer.

The bill also encourages the market to move back to fixed rate mortgage, full documented loans.

The legislations would also - Prevent Predatory and Abusive Lending – Many homeowners in the current mortgage crisis receiving more expensive loans than they qualified. Hence – stated loans, stated assets, stated income will cease. The bill would also require that originators to disclose to consumers the compensation they receive from the transaction.

In addition, the bill would require new federal rules to be written to require creditors to retain an economic interest in a material portion of at least 5% of the credit risk of each loan that the creditor transfers, sells or conveys to a third party.

Also – Renters would be protected from being evicted from the home they are renting. Appropriate notice would need to be given before the tenants could be evicted.

While this bill is still relatively new, I cannot help but think when it hits the House of Representatives it will be totally changed. Although I personally thought it would not make it through the Financial Services Committee and it did.

Well – that I all the news I have this week and I hope everyone is staying busy. I am sure busy. Until next week – keep processing. More Later.

About the Writer. As an active FHA DE Underwriter for the past 15 years, Joan Ewing is a proud NAMP Certified Ambassador Loan Processor (CALP). Joan brings years of FHA Government experience to her writings, letting her readers tap into her underwriting knowledge base. If you would like to become a writer for NAMP, please email us at: blog@mortgageprocessor.org.

SOURCE: Published by NAMP Publishing Group, a division of the National Association of Mortgage Processors (http://www.MortgageProcessor.org)