VOTE TODAY TO AVOID BANNING OF YSP, STATED INCOME

H.R. 3915 the "Mortgage Reform and Anti-Predatory
Lending Act of
2007" has been introduced and the House of
Representatives
Financial Services Committee will vote next week
whether or not to
enact it. 

In a nutshell the act will:

1. Require national licensing and a net worth
requirement, bond and
criminal background check for all mortgage brokers
2. Outlaw yield spread premium (YSP)
3. Outlaw mortgages where the borrower cannot fully
document the
ability to repay

As many of you know, I am a huge proponent of broker
licensing. I
think this weeds out the bad and leaves the good guys
in business.
I registered, paid for my surety bond and passed my
credit and
criminal background check with flying colors last year
so that's
not a problem.

I don't use YSP much on loans simply because my
borrowers are
concerned about cash flow and often the sellers will
cover their
closing costs - including origination. I have used it
occasionally
to buy down rates but this is not a big deal to my
clientele.

The biggest problem brokers and real estate investors
should have
with this is the elimination of reduced documentation
loans. 

If you are self-employed and you do not pay yourself
and issue a W2
to yourself through your company OR you do not show
enough taxable
income on your returns to qualify for a full doc loan,
you will not
be approved for a residential conventional loan.
Period. If this
act passes, I myself will not be able to qualify to
refinance any
of my rental properties.

In my view, this proposed legislation is aimed at
eliminating
mortgage brokers altogether. Many of the lenders I
work with have
closed their wholesale channels and no longer accept
3rd party
originations from brokers because the media has placed
the blame
for the housing debacle squarely on the shoulders of
unscrupulous
brokers.

The other reason why we should be concerned about this
act is the
virtual elimination of competition for the big banks. 
This
legislation will drastically reduce your options as a
borrower and
the options of your buyers if you are a flipper or
wholesaler. 

Please educate yourself on this proposed legislation.
The link is
provided here:
 
http://www.house.gov/apps/list/press/financialsvcs_dem/subprimeleg.p
df

Then please sign the online petition opposing this
legislation here:

1. http://www.petitiononline.com/HR3915/petition.html