Red Alert: H.R. 3915 Passed The House!

For those of you who don't know what HR 3915 is here is a breakdown. It will:

1. Create a National Licensing System for Mortgage Lenders
2. Hold loan securitizers responsible for consumers' "reasonable ability" to repay a loan
3. Eliminate the Y.S.P. (Yield Spread Premiums or Rebates) for Mortgage Brokers

It passed by a vote of 291-127. It still has to go through the Senate, and even if it passes there, I am not sure President Bush would sign off on it. However, it has already cleared one major hurdle and only two to go.

The Chairman of the Mortgage Bankers Association, Kieran Quinn stated "Have no doubt, this bill will limit credit availability and options for thousands of Americans who want to grab their share of the American dream of homeownership."

I agree with them. If you force brokers to eliminate a YSP and hold them accountable for any bad luck that happens to a borrower for the life of the loan, why should these people stay in business? You have basically eliminated their ways to make money, other than charge the borrower several thousands more for the same loan, and are holding them at risk until the loan is re-financed or paid off after 30-50 years.

So if most of the Mortgage Brokers go out of business (which they currently bring in about 75% of all mortgage loans) the consumer will have to turn to their local banks for loans. They will have to shop their loan themselves (I can't see Wells Fargo calling Washington Mutual for their rates), and chances are the rates will be higher since there will be a lot less competition.

I don't have a problem with tightening the restrictions on lenders and brokers, but I think this is excessive to say the least. The N.A.M.B. is trying to get support to kill this bill or get it completely re-written and we need to support them. Even if you are not a loan officer or mortgage broker, we need you to help crush this bill. We risk losing countless jobs and a lack of competition for the borrower, which could force YOUR client to pay THOUSANDS more for the same loan.

Here is a link directly to the senate website with everyone's contact information