I’ve been writing a series of articles this week about the HR 1728: Mortgage Reform and Anti-Predatory Lending Act to raise industry awareness about a bill that could have a significant impact on all real estate and mortgage professionals.
If you are out of the Loop, here is a quick summary:
Summary and background from GOP.gov
H.R. 1728 would place a number of new federal restrictions on mortgage loan providers, servicers, brokers, and third parties who buy or sell mortgages on secondary securities markets, as well as appraisers. The bill also holds creditors liable if they do not comply with the new regulations.
Main Bullets that I care about:
- Mortgage brokers lose the ability to use their YSP (Yield Spread Premium) to offer No-Cost mortgage loans. Banks, on the other hand, still don’t have to disclose their same (SRP).
- It will be a 30 year fixed rate only world, or borrowers will have the ability to sue lenders for up to three times their loan amount.
- Mortgage companies will have to put up 5-10 percent in reserves on any loan that they originate, fund or transfer - other than the standard full doc 30 year fixed. This will basically force all non-depository lenders out of the business. Yipee for big Government owned banks!
- Nobody (including short sale attorneys and compliant loan modification companies) will be able to charge homeowners to negotiate with a lender on the borrower’s behalf for better loan terms. This is bad, I don’t care what your opinions are about the loan modification business. There has to be an equal balance of power, and homeowners should have the right to pay an expert for a fair trial. Obviously, government sponsored counseling agencies won’t be included in this rule.
Online Resources / Related Articles:
- HR 1728 Summary
- HR 1728 Full Text
-
The End of No-Cost Mortgage Loans and Other HR 1728 Concerns
- Why All Mortgage Originators Should Care About H.R. 1728: Mortgage Reform and Anti-Predatory Lending Act
- HR 1728 Mortgage Reform Act Moves Through The House
- How Soon Until H.R. 1728 Reaches The Senate?
- Supporters of H.R. 1728: Mortgage Reform and Anti-Predatory Lending Act believe borrowers were duped into bad loans.
- Mortgage Industry, A House Built on Sand
- HR 1728 and Online Gambling
- HR 1728: Mortgage Reform – LeadPress.com
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I’m sure that there are several more articles that can help us gain a better understanding of how HR 1728 will impact the future of our industry.
If you have valuable links / information to share, please feel free to post a link in the comment section.
Thanks
mm
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Good article. In reading the language after the section that it says 3rd parties cannot charge for a loan mod UNLESS…
unless the modification renewal, extension or amendment results in a significantly lower annual percentage rate on the mortgage, or a significant reduction in the amount of the outstanding principal on the mortgage, for the consumer and then only if the amount of the fee is comparable to fees imposed for similar transactions in connection with consumer credit transactions that are secured by a consumer’s principal dwelling and are not high-cost mortgages.
This seems to suggest it will be allowable but only if you can produce results.
Thanks for helping clarify that point a little James. I’ve been having a few conversations with loan mod companies and attorneys who are all trying to figure out exactly what this bill means to their industry.
Please let us know if you find anything else out.
mm
Good Post Mark – I had not heard about this until your post. Thanks for keeping us up to date.
Wow..this is pretty heavy stuff. Thanks for posting the article. This has the potential to really change things.
Where does it specifically talk about Short Sale or Loan Modification attorneys or anyone collecting a fee?
Where does it specifially address third parties buying and selling mortgages on the secondary market etc.?
There is a grass goots movement starting at http://www.hr1728.org there is info and many links.
Hi Mark, many thanks for your summary on the Mortgage Reform Act etc.
I was told by a third party that under this Act that owner financing through Real Estate Contracts were going to be limited to 1 every 3 years?????
Any insight would be greatly appreciated.
Angie