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Lending Industry Gets Its 'Due' for Mortgage Mess

By Evelyn Bruder on Jun 6th, 2010
Topics: Buyers

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From realestateabc.comBoth houses of the U.S. Congress are currently working on financial legislation in order to prevent future market meltdowns. And while not the focus of the bills, new rules and restrictions on the mortgage lending industry are included in each, as many people lay the blame for the current recession at the feet of the housing industries excesses and failures."It would have been unthinkable to get through financial reform without addressing the mortgage market because this is why were are in the mess we're in," said Julia Gordon, senior policy counsel at the Center for Responsible Lending, as quoted in a Washington Post article.The new legislation makes at least four key changes to the way mortgage lenders currently do business. First, it would do away with prepayment penalties on certain types of loans. These substantial fees have discouraged borrowers from refinancing into cheaper loans, which has contributed to the continued foreclosure avalanche as troubled borrowers have been financially unable to get out of their risky, high-interest loan because of the prohibitive cost of the prepayment penalties. The new potential law would prevent these penalties from being attached to adjustable rate mortgages and subprime loans as well as other mortgages with extremely high interest rates. Neither would loan officers be able to receive greater compensation for issuing prepayment penalties.Second, the bills proposes to severely limit mortgage broker fees and incentives, making it illegal for them to give borrowers higher interest rate loans than they qualify for. Some argue that incentive-based pay was a big part of the mortgage meltdown, as brokers and loan officers let their greed determine what type of loan to give, not what was most financially sound. The mortgage industry defends itself however, saying that higher interest rates are a trade off for consumers when they get to close a loan faster or if they have lower credit scores.For the rest of the story, click here.**************************Evelyn Bruder, CRS, GRI, ABR, E-PRO, Las Cruces CyberstarThe Evelyn Bruder Dream Team http://www.homesforsaleinlascruces.com For more information about what we do and how we can provide all of your real estate needs, CLICK HEREWe welcome comments and questions - CLICK HERE

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Evelyn Bruder
Evelyn Bruder Las Cruces Real Estate Dream Team
evelyn@homeslascruces.com
(575) 650-7224

141 Roadrunner Parkway Suite 141
Las Cruces, NM 88011

Steinborn & Associates Real Estate (575) 522-3698

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