Government regulation has always been a sour topic in every industry. As time goes on, the government is beginning to regulate industries that previously were self-monitored at best. This past year, the state of crisis that the real estate industry is in has put it under a large microscope and has opened up it up for much scrutiny. Although some regulation is encouraged in times like these, some fear that once the floodgates open, they will be hard to close. Such is the case with The Mortgage Reform and Anti-Predatory Lending Act of 2007 (this will link to a pdf of the actual bill), a bill currently being considered by The U.S. House Committee on Financial Services.
Proponents of the bill believe that if passed, it will be the demise and eventual extinction of all mortgage brokers. On the other hand, advocates believe that this bill will only ensure that buyers will have all information disclosed to them regarding their transaction in order to be an educated buyer and brokers will have to be more thorough in processing transactions. To understand the bill better, one must first break down the sections of the bill into the most important, more manageable sections (see below for a brief breakdown of a few sections).
Usually bills are never 100% agreed on by anyone. There are often many amendments made to a bill before it is acceptable. This bill is no exception. Most will agree that requiring brokers to become licensed and registered is beneficial to both the buyer and others who work with brokers. Holding people to a high set of ethical standards, helps bring more ethical practices to any industry. However, industry professionals are split on whether this bill will cause brokers to loose money by making them disclose YSPs or requiring YSPs too be the same amount regardless of the loan type will or if will cause higher mortgage closing costs, larger required down payments or fewer available mortgage source.
The one thing agreed on by all is that no bill should be rushed. As industry professionals, we should thoroughly read the bills that will dramatically affect our industry and then make an educated decision when we decide which side of the line to be on.
(Summary of Sections provided by Andy Scherer, Countrywide)
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