Prompted by the meltdown of the subprime mortgage market and the resulting flood of foreclosures, House Democrats have reacted (over-reacted?) with HR3915 the "Mortgage Reform and Anti-Predatory Lending Act of 2007". Among other provisions, the Act would prohibit prepayment penalties on "High Cost" mortgages (including loans already in existence) and require that consumers receive "counseling" before entering into loans of this type.
Borrowers won't be the only group that will need counseling if the Act passes as drafted. Lenders will be prohibited from steering any applicant into a loan that "isn't in the consumer's best interests" (could that possibly be any vaguer?). If you think that language will make lenders' blood run cold - read on.
Not wanting to seem "pushy", Congress would make adoption of the Act by individual States entirely optional. Thing is, States that don't implement the new lending standards within two years will be automatically subjected to HUD regulations requiring that lenders act "solely in the best interest" of the consumer".
Other pending (and more rational) legislation prohibits lenders from "coercing, extorting, colluding, inducing, bribing or intimidating" appraisers into delivering predetermined values. In addition, buyers would receive copies of all appraisals completed as part of a purchase (i.e. when it took six appraisals to finally get one that "hit the number").
Other than HR 3915's effective elimination of adjustable rate mortgages for most borrowers, there's not much in this legislation that will affect the Mountain Home real estate market. We pretty much remain an island of tranquility in the current financial tempest and may it remain ever so.
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