HR1728 Mortgage Reform and Anti-Predatory Lending Act
HR 1728 has already passed the House and is now in the Senate waiting on a vote to become law. The main points of the law are more protection for the consumer from the lender. Notice I said Lender not Banks or Mortgage companies, so I am including the homeowner offering Owner Financing. Some of the new requirements will be too much for a homeowner to comply with.
For example the lender will be required to provide monthly disclosures, I sure a receipt for a mortgage payment will not meet the requirements of a disclosure. I expect the minimum will be a running balance just like a credit card statement. What homeowner will be mailing out monthly running balances. The law will also encourage the use of escrow accounts for both Taxes and Insurance, something else the common homeowner is not likely willing to do.
I'm not in favor of Balloon Loans, but they do have a place in real estate just like Bridge Loans, they are there to fill a gap and were never intended as full Amortized Loans. The current $8K bridge loan made as the down payment for First Time Home Buyers is a bridge from closing until you receive your tax return, at which time you pay off the bridge loan. As for a Balloon the purpose was to keep the loan amount lower until the remainder of the loan will be paid off at a certain date in the future like after the sale and closing of a home that is currently on the market. These loans were abused and as such then new law is basically making then illegal, with the wording that any future payment may not be more then double.
I feel that the issue here is that the government is lumping together the homeowner with the Banking Industry. The common homeowner does not have the resources to provide or meet all the requirements that are currently in this bill. This will remove another source of funding from the already stalled Real Estate Market. The following link is a good source for the current status of the bill. http://www.govtrack.us/congress/bill.xpd?bill=h111-1728
A solution to the problem could be as simple as exempting individual homeowner for the law, and required professional to follow the law. What is you take on the matter?
C. "Chuck" Mixon, Keyes Company
Cutler Bay & Palmetto Bay, Florida