A bill is expected to pass that alters the compensation to loan officers. “ The provisions would change the way loan officers are compensated, hold lenders responsible for the loans they make, require them to extend mortgages only to borrowers who can repay them and limit penalties for those who pay off their loans.” Dina Elboghdady said in the Washington Post article written on May 30, 2010.
I think it is important to review and make provisions aimed at preventing another mortgage meltdown. The provisions mentioned above are included in both the House and the Senate versions of the financial-overhaul legislation. This summer a final bill is scheduled to reach President Obama for signature.
The bill would end practices of mortgage loan officers steering borrowers toward mortgages they won’t be able to keep paying. And loan officers would not be paid extra for issuing mortgages with prepayment penalties if the borrower pays off their mortgage early. Those loans were considered more valuable to investors because they crimped a borrower’s ability to refinance when they got a cheaper offer.
“Lenders would now have to assess the borrower’s ability to pay the highest scheduled monthly payment for five years out. Previously, lenders had considered only the ability to repay low teaser rates,” Elboghdady said.
This bill is expected to pass. I think it is a good thing to ensure borrowers can repay the loan and hold loan officers accountable for making worth whileloans.
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