Changes in Minnesota....Is it going to help?

 After new legislation went into effect for mortgage loans on August 1st, 2007, mortgage companies in Minnesota have been scrambling.  This new legislation has banned mortgage brokers in MN from doing stated income or No Doc loans.  I'm not quite sure why this seems like it was so last minute to everyone.  We knew the legislation was coming....we knew what it said....we knew where we were headed.

But, it seemed as though the mortgage companies were just pretending that nothing would change.  We all kind of rode the wave and when it crashed down, nobody knew what to do.  Within the past couple of weeks, we have been hearing that many mortgage companies are closing shop and going to work for Federally Chartered Banks where, according to the new bill, banks and credit unions are exempt from the new standards. 

However, I'm not sure this is going to change the way we can do business.  Sure, we might be able to now offer the "bank" loans as well, but according to the new bill, "guidance from various federal depository institution regulatory agencies may discourage or prohibit [stated income and no doc] loans."  So many of these "Banks" probably aren't going to be offering these programs anyway. 

It seems that all lenders, regardless of the state originated, are tightening up on these guidelines while they see what is in store for the market. 

As far as the new legislation goes, I have heard that Georgia had an anti-predatory lending bill that was overturned because borrowers complained to their local representatives.  Maybe that's what we should be doing.  We should be informing those borrowers that we can't help to contact their local representative and give them a piece of their mind. 

The state of Oregon tried to pass a similar bill and the Brokers came together with two separate Mortgage Brokers Associations and past clients who benefited from such loans and brought their case to the legislators. As a result, they were able to stop the passage of such a bill.

We've already seen the effect that this is going to have on our clients and borrowers.  But, I'm sure this is just the tip of the iceberg.  Property values are declining, houses are sitting on the market for months, and many people no longer qualify for a home. 

If you are a self-employed borrower or need a stated income loan in Minnesota, please call your local representative NOW.  Let's do what we can to make sure that loans are available to the people who deserve them. 

Information provided to you by Angie Gerhardson, Personal Mortgage Consultant with Homestead Mortgage Corporation.   To get mortgage information or view my mortgage calculator, please click here.