Lets assume for a minute that you had an extra million dollars lying around the house.
Lets also assume that you have decided to loan this money out to people and businesses in hopes of a greater return than traditional investments yield.
We lease a storefront, open our doors and in walk Washington, DC - Reps.
Brad Miller, Mel Watt and Barney Frank.
"I'm sorry," they explain, "we have decided that you can not loan your money to this segment of the community".
Also, when you do loan your money to anyone we need you to pay more cost on each loan to facilitate this new law.
Furthermore, if you decide that you would like to sell these loans to someone else to replenish your lending funds that person can now be sued for any mistakes that you have made.
Meet your mortgage reform.
If I were a lender I would pick up my toys and go home, and many will should this proposed legislation go through.
History has proven time after time that whenever Congress tells banks how to loan money they stop lending or raise prices.
"Barney Frank, Mel Watt and I see protecting vulnerable homeowners from predatory mortgage lenders as a core, defining Democratic value.
When a family's home is a stake, lenders had better play by a fair set of rules," said Rep.
Brad Miller.
This statement assumes that lenders do not play by a fair set of rules.
In fact, lenders have a set of rules that would cause most business to close their doors it's called, RESPA - Real Estate Settlement Procedures Act.
RESPA is a HUD consumer protection statute designed to help homebuyers be better shoppers in the home buying process, and is enforced by HUD.
RESPA requires that consumers receive disclosures at various times in the transaction and outlaws kickbacks that increase the cost of settlement services.
"Subprime mortgage crisis prompts need for major reform...
" Our Washington, DC - Reps.
are using a market correction to garner support for higher taxes and their partisan agenda.
If they really wanted to solve the "crisis" they would find better ways to enforce the rules we have now.
Of coarse this would not get very much press coverage.
Attaching loan level restrictions and licensing designations to bank personnel and originators is akin to requiring Starbucks employees be certified because the parent company sold coffee to terrorist.
"The Subprime mortgage crisis" is not about bad banks foreclosing and taking the average American family's home away as you have been led to believe.
The "Crisis" is about banks that gave home loans to people who never deserved loans in the first place.
These borrowers were credit risks, the banks gambled and they are now paying the price.
Don't you think moving forward that these banks will be more judicial when lending to this type of borrower? It's called a free market system.
Default rates on subprime loans are around 8-12% nationally, which is huge in the banking world.
However, 78% of these "victims" are still in their homes.
Guess how many of these people will get homes if our Washington, DC - Reps.
have their way? The "reform" that they propose will handcuff banks to one set of generic laws dictating to the bank who with poor credit gets a loan.
One law does not fit all borrowers.
Many people will not get loans simply because of the litigation liability the banks face.
Take a look at all the states that have passed the "Subprime Reform" laws.
In almost every case within a year the laws have been reversed or lenders simply packed their bags and went away.
Ask Georgia, Utah and Texas.
Lets also assume that you have decided to loan this money out to people and businesses in hopes of a greater return than traditional investments yield.
We lease a storefront, open our doors and in walk Washington, DC - Reps.
Brad Miller, Mel Watt and Barney Frank.
"I'm sorry," they explain, "we have decided that you can not loan your money to this segment of the community".
Also, when you do loan your money to anyone we need you to pay more cost on each loan to facilitate this new law.
Furthermore, if you decide that you would like to sell these loans to someone else to replenish your lending funds that person can now be sued for any mistakes that you have made.
Meet your mortgage reform.
If I were a lender I would pick up my toys and go home, and many will should this proposed legislation go through.
History has proven time after time that whenever Congress tells banks how to loan money they stop lending or raise prices.
"Barney Frank, Mel Watt and I see protecting vulnerable homeowners from predatory mortgage lenders as a core, defining Democratic value.
When a family's home is a stake, lenders had better play by a fair set of rules," said Rep.
Brad Miller.
This statement assumes that lenders do not play by a fair set of rules.
In fact, lenders have a set of rules that would cause most business to close their doors it's called, RESPA - Real Estate Settlement Procedures Act.
RESPA is a HUD consumer protection statute designed to help homebuyers be better shoppers in the home buying process, and is enforced by HUD.
RESPA requires that consumers receive disclosures at various times in the transaction and outlaws kickbacks that increase the cost of settlement services.
"Subprime mortgage crisis prompts need for major reform...
" Our Washington, DC - Reps.
are using a market correction to garner support for higher taxes and their partisan agenda.
If they really wanted to solve the "crisis" they would find better ways to enforce the rules we have now.
Of coarse this would not get very much press coverage.
Attaching loan level restrictions and licensing designations to bank personnel and originators is akin to requiring Starbucks employees be certified because the parent company sold coffee to terrorist.
"The Subprime mortgage crisis" is not about bad banks foreclosing and taking the average American family's home away as you have been led to believe.
The "Crisis" is about banks that gave home loans to people who never deserved loans in the first place.
These borrowers were credit risks, the banks gambled and they are now paying the price.
Don't you think moving forward that these banks will be more judicial when lending to this type of borrower? It's called a free market system.
Default rates on subprime loans are around 8-12% nationally, which is huge in the banking world.
However, 78% of these "victims" are still in their homes.
Guess how many of these people will get homes if our Washington, DC - Reps.
have their way? The "reform" that they propose will handcuff banks to one set of generic laws dictating to the bank who with poor credit gets a loan.
One law does not fit all borrowers.
Many people will not get loans simply because of the litigation liability the banks face.
Take a look at all the states that have passed the "Subprime Reform" laws.
In almost every case within a year the laws have been reversed or lenders simply packed their bags and went away.
Ask Georgia, Utah and Texas.
Source...