Thursday, November 15, 2007

Frank Wolf For Predatory Lending?

This morning, Frank Wolf was one of 193 Republicans voting against the Mortgage Reform and Anti-Predatory Lending Act of 2007. The bill, which passed the House 224-195, would "amend the Truth in Lending Act to reform consumer mortgage practices and provide accountability for such practices, to establish licensing and registration requirements for residential mortgage originators, to provide certain minimum standards for consumer mortgage loans." Atrios has more:
It's one of those below the radar things, but there's a fight brewing between mortgage brokers and the rest of us over legislation. There's legislation to outlaw something called "yield spread premiums" in which brokers are given a cut if they give borrowers crappier loans than the ones they qualify for. The thing is that most people don't understand that their mortgage broker isn't their pal who simply runs their credit score and gives them the best mortgage they qualify for, but is in fact someone who benefits from screwing them as much as possible. People just don't think of their mortgage broker in the way they think about used car salesmen even though they obviously should.

There's more at Open Left as well:
...The housing crisis is hitting swing areas like Florida's central corridor viciously, so getting on this topic as the economy becomes one of the two top issues in 2008 is extremely important for Democrats going into 2008.

One of the reasons the situation is so messed up is that mortgage brokers have an incentive to lie and steal from their clients. This is couched in a complicated term called the 'yield spread premium'. What this basically means is that if you are a mortgage broker and you get a client to take a loan that costs more than it should, with higher penalties and interest rates, you get a kickback from the bank.

Ergo, lots of people got crappy loans they can't afford. It hurts minorities disproportionately, and it's bad for everyone...

So, the Democrats are trying to help fix this situation, but people like Frank Wolf (and the mortgage brokers) are trying to block it. Reason #5,982 why Frank Wolf needs to retire and get a job as...oh, I dunno, a mortgage broker perhaps? Ha.

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