The House passed some dramatic legislation yesterday designed to protect borrowers.
And it isn’t surprising that some in the mortgage and banking industries are livid.
The bill is supposed to guard borrowers and prevent future massive foreclosures.
Here’s the problem as we see it. There is too much legal language in the bill that could mean just anything.
We all know where legalize as written by lawyer/lawmakers leads to. More litigation.
Mortgage brokers will have to be on their toes now to avoid making loans to unqualified borrowers. Heaven help them if these folks get behind on a payment or two.
Sure, the Wild West was rampant during the last few years. A lot of people got loans that never should have had them.
(For example, we had some Section 8 tenants who could not, or would not, pay the rent to us. Were we surprised when they bought a house of their own during the last gold rush)?
It’s too bad that the industries did not police themselves more efficiently because now the government is stepping in, or should I say, stepping upon.
Were lawmakers’ intentions good?
Isn’t the road to hell supposedly paved with good intentions?
So politicians needed to prove they were feeling the pain of their constituents. But I’m afraid they’ve created more pain in the process.
But here’s the good news.
The House just gave buy and hold investor/landlords more tenants.
Credit just got much tighter for those folks trying to buy their first house. Some will never buy. They’ll be renting longer from you and me.
And there is one good part of the bill that I approve of.
The restricting of prepayment penalties charged to borrowers who pay off loans early.
For now, our eyes are on the Senate and the President to see where all this new and daring mortgage restriction legislation goes next.