Thursday, November 8, 2007

The Villains of H.R. 3915

As you may or may not know, my industry is facing extinction in the form of a new insidious law called H.R. 3915. Well, now it is time to name names as far as villains of this bill. First, here are the co sponsors of this bill.

Melissa Bean (D Il8)
Michael Capuano (D MA8)
Julia Carson (D IN7)
Willaim Clay (D MO1)
Emaneul Clay (D MO5)
Keith Ellison (MN 5)
Barney Frank (D MA4)
Al Green (D TX9)
Luis Gutierrez (D IL4)
Paul Hodes (D NH 2)
Stephanie Jones (D Oh11)
Marcy Kaptur (D Oh 9)
Carolyn Maloney (D NY14)
Greg Meeks (D NY 6)
Gwen Moore (D WI4)
Christopher Murphy (D CT5)
Betty Sutton (D Oh13)
Maxine Waters (D Ca 35)
Melvin Watt (D NC 12)
Albert Wynn (D MD4)

Villain number one is BRAD MILLER (D NC 13). If any of these Representatives is your representative, they deserve an email, fax or phone call NOW.

There are more villains though. Let's start with the AFL-CIO. They wrote this ignorant piece in support of the bill. (one thing everyone will notice about supporters of this bill is none of them have any real estate or mortgage experience and most importantly they support it for vague and hard to define reasons).

How about this collection of consumer and advocacy groups.

AARP - Susanna Montezemolo 202-434-3807
American Federation of Labor and Congress of Industrial Organizations -
Greg Jefferson 202-637-5087
Black Leadership Forum - Gary L. Flowers 202-689-1965
Center for Responsible Lending - Kathleen Day 202-349-1871 or Sharon Reuss 919-313-8527
Community Development Financial Institution Coalition 703-294-6970
Consumer Action - Linda Sherry 202-544-3088
Consumer Federation of America - Allen Fishbein 202-387-6121
Consumers Union - Jeannine Kenney 202-238-9249
National Association of Consumer Advocates - Ira Rheingold 202-452-989
National Consumer Law Center, on behalf of its low-income clients - Alys Cohen 202-452-6252 x102
Opportunity Finance Network - Jennifer Vasiloff 703-967-1338
U.S. Public Interest Research Group - Ed Mierzwinski 202-546-9707 x314
About the Center for Responsible Lending

Here is a summary of what they said.

We commend Chairman Frank and Representatives Watt and Miller for taking the lead in addressing the underlying problems that have led to the escalating foreclosure crisis in this country. Banning prepayment penalties in the subprime mortgage market, requiring lenders to assess each borrower's ability to repay, and eliminating the bonuses lenders now pay to brokers to put people in more expensive loans than those for which they qualify would go a long way to protecting families from the deceptive and abusive loans that ultimately lead to a decline in home ownership.

Like I said, vague and undefined. Each one of these groups deserves a phone call. If you belong to any of them, please ask what they think will happen to the mortgage market if YSP is eliminated. Also, these groups are in favor of outlawing pre payment penalties on sub prime. Please ask them if they know that pre payment penalties create lower rates (everything else being equal of course). Please ask them if they would accept a pre payment penalty if it was the only loan they could qualify for.

The National Low Income Housing Coalition is another villain. They support the bill because they think it gives "protections to renters".

Low income housing advocates are urged to take action to support protections for renters in H.R. 3915, the Mortgage Reform and Anti-Predatory Lending Act of 2007, which will be marked up by the House Committee on Financial Services on November 6.

Introduced by Representatives Brad Miller (D-NC), Mel Watt (D-NC) and Barney Frank (D-MA), chair of the committee, this bill would address abuses in the mortgage lending market and provide basic protections to the mortgage consumer.

The bill also provides foreclosure protections for renters. In case of foreclosure, any successor who takes over the property will have to honor preexisting leases, and tenants without a lease will have at least 90 days before being required to vacate. The renter protection provision is expected to be controversial, with opposition coming from the lending industry.

At least their support is more defined. First, most leases are honored upon transfer of property (whether it is through foreclosure or sale). Most new landlords are not motivated to look for a new renter when there is a warm body. What these guys want to do is force a landlord to keep a tenant in a property for a minimum of ninety days even though there is no lease. Now, that maybe a good deal for the tenant, however a bill should be fair to all. Here is their contact information. Please ask them if they realize that this bill eliminates YSP which will eliminate the mortgage broker entirely. Please ask them if they realize that without mortgage brokers there will be significantly less loans available to low income folks, or their constituency. (it should come as no surprise to anyone that this group is affiliated with ACORN. Here is the way ACORN contributes to the mortgage debate.)

Finally, the rest of the villains are those that treat this story with apathy. If it was you struggling for your professional survival would you be so cavalier? Would you be so apathetic? Make no mistake this bill isn't bad merely because it will put brokers out of existence. It is bad because it makes no sense. It puts all of the blame on one group not because we are fully responsible, but because we are the best target. This bill will cripple the housing industry, our economy, and give the banks full control of the mortgage market. There is a line I really like from the movie Hotel Rwanda. After Don Cheadle's character gets excited because a network will finally show the gruesome carnage of the war in his country, the cameraman (played by Joaquin Phoenix) said this.

"They'll say 'oh, how horrible,' then return to eating their dinner."

If you read about this bill, and return to eating your dinner because it isn't your derriere on the line, as far as this crisis is concerned, you are another villain.


Anonymous said...

Grow up you whining little complainer. The only reason that this law is needed is because money grubbing people like you are trying to take advantage of low income consumers who get stuck in mortgage loans that they clearly cannot afford, then are forced into delinquency and foreclosure. The people supporting this bill are attempting to protect consumers from unscrupulous predatpry lending practices that do more harm than good. If this law is so detrimental to your career, try getting a less sleazy career that doesnt ruin people's lives.

mike volpe said...

First, whenever we hear anything vague like predatory lending and unscrupulous practices, to the consumer it means,


Second, I didn't know that providing mortgages so that people could buy property was sleazy.

Third, as my follow up piece pointed out, there were five separate entities that contributed to the crisis. Ignoramous like you only know about mortgage brokers. You don't put any responsibility on the bank or the consumer.

You don't even know that Wall Street and Congress played just as big a role. Yet, you say this a good law even though you don't know anything about the crisis or how it deals with each of the five entities.

This isn't merely a bad law because it will put me out of business. It is a bad law because it attacks one group for an even that happened because of the symbiosis of five different groups.

If you are right, not only did I create loans that people couldn't afford, but find them property they couldn't afford, then find a market for those loans, and finally I also created all the needless paperwork that made it easy for the borrower to get confused.

Did I do all of it, or is it more likely that I exploited the events around me. The mortgage broker's fault in this matter was using the opportunities given to them by every other entity to do bad. The thing is mortgage brokers have been scum for a long time. It is not new. So if people couldn't predicted that creating all sorts of ridiculous unverifiable loans would be exploited by my colleagues, they really should have known better.

Anonymous said...

All said, there is plenty of sleaze to go around. As a mortgage banker that only brokered only 10% of my business, I really don't see this as a threat. It will take out those that used the the term Stated Income as "State Your Income". Fortunately, I never confused the two.