Its been a long time coming.
There is now a movement at the federal government level to create oversight of the mortgage broker industry.
US Representative Barney Frank introduced legislation yesterday that would establish for the first time close federal supervision of mortgage brokers, who have become the dominant providers of home loans – particularly the subprime loans at the heart of the foreclosure crisis.
Whether or not this legislation passes, this industry needs oversight and not self-policing. The majority of residential mortgages are being issued through wholesale channels (mortgage brokers). There are certainly excellent mortgage brokers out there but the system needs checks and balances.
As it relates to appraisals, I have always contended that the person who is paid a commission on the issuance of a mortgage to a consumer should have no say in assessing the loan quality. There is too much of a chance for self-dealing.
Bank of America announced today that it will cease lending through wholesale channels. Translation: no mortgages through mortgage brokers.
WaMu tried to be proactive to preempt more regulation from coming down the pike.
The company’s new rules apply to its loans marketed through 19,000 independent mortgage brokers, among other outlets, but not through its own branches. Earlier this month, it began requiring brokers to verify that they have disclosed key loan terms, spelled out in simplified language. Washington Mutual will also call borrowers before the mortgage closes to review the terms.
The Federal Reserve consumer panel made recommendations today including:
- Not to use the teaser rate to qualify.
- Require escrow payments for property taxes and costs tied to buying a house.
- Limit or eliminate prepayment penalties.
There’s still a lot of marketing goin’ on.
It struck me as a little fishy but at about the same time, the White House was also busy.
[…] Check it out! While looking through the blogosphere we stumbled on an interesting post today.Here’s a quick excerptThere is now a movement at the federal government level to create oversight of the mortgage broker industry. US Representative Barney Frank introduced legislation yesterday that would establish for the first time close federal … […]
I cannot believe the Q3 report still isn’t up. What’s going on Mr. Miller?
Congress is considering legislatiion to hold the Lender liable for loans made to borrowers that fail. The legislation is saying that the lenders must predict whether the borrowers will be able to be able to repay the loan in the future. The Lender cannot predict the future. Clearly,. it is impossible to predict changes to the borrower’s income or expenses in the future… HOWEVER, it is possible to help the borrower monitor his/her ability to stay on-track and not succumb to the forces that resulted in his/her poor credit rating. It is possible to help the borrower monitor his/her financial situation by careful and specific FINANCIAL LITERACY tools that research has proven to help guide the borrower to avoid financial distress. These tools will work if we use them. My research has proven that it is possible to guide the borrower if he/she is willing to do so. This should be a requirement of all borrowers, especially if the new proposed legislation takes effect. How else can the lender uphold the new fiduciary responsibilities that this new law will impose on the lender ?
BoA is shutting down all wholesale mortgage activities because it will soon own the largest retail shop in the country through the huge convertible loan it made to CFC. The strike price on that convertible was $18. They’ll probably wait until it heads into single digits before actually gobbling them up.
[…] go after the “sleazy” who profited during this time. Check out Jonathan Miller’s post today at Matrix regarding the Federal government’s plan to create oversight of the mortgage broker […]