Mortgage Reform and Anti-predatory Lending Act of 2007 HR 3915

Mortgage Reform and Anti-predatory Lending Act of 2007 HR 3915

Lendfast.com - Do you have perfect credit and a sizeable down payment for your first home? If so, this article may be of little interest to you. However, if you are like the millions of Americans who do not fit this profile you may want to continue reading.

As an election year looms, Washington Lawmakers are lining up behind the Mortgage Reform and Anti-predatory Lending Act of 2007 like moths to a flame. Politicians are eager to make sure that they are not the candidate on record who voted against the mortgage reform bill HR 3915.

The LA Times, NY Times and other Democratic pundits are painting the “mortgage crisis” as an ongoing epidemic, when in fact, it is a virus that has come and gone. The damage we see in today’s mortgage market was created well over two years ago and we are just now feeling the consequences of those mistakes.

In retrospect, issuing mortgages to people who did not merit a loan in exchange for higher rates and fees was probably not the best of ideas, duh! And now the price is now being paid. Banks are reshuffling, CEO’s are stepping down and subprime lending will never be the same again.

If you have children you probably recognize the fact that you rarely have to teach the concept of “hot” to your children more than once, burn me once so the saying goes. This concept works in business as well; it’s called a free market place. The lenders and investors, in effect, have been burnt and are very eager not to repeat the subprime practices of yesteryear. This is the beauty of a free economy.

Lawmakers attempting to pass the Anti-predatory Lending Act of 2007 right now are effectively trying to tell lenders whom they can and can’t loan money. HR 3915 is vaguely written and enables borrowers to sue their lenders for giving them a loan should they decide not to pay. Allow me to break this down. I ask you for a loan. I tell you that I can afford the loan. You loan me the money. I do not pay you back the loan. I sue you for loaning me money because you shouldn’t have.

Would you loan anyone money under these conditions? Of coarse not, and neither will the banks. This is only one small attribute of a poorly written bill that is unequaled by it’s author’s ignorance for the subject matter. Almost every Representative smiling for the camera and saying “Mortgage Reform” instead of “Cheese” can discuss little more than their parties talking points on this issue.

See if any of these questions hit home for you. Do you owe a little too much on your credit cards? Have you ever missed a mortgage payment? Do you have the tendency to spend too much at Christmas? Did you write off too much on your taxes last year? How about that car payment, what were you thinking on your salary? Can you prove your wife’s income? Are you self-employed?

Answering, “yes” to any of these questions may affect your “reasonable ability to repay” that lenders must prove so that they are not liable for loaning you money. Taking this lending decision out of the lenders hands and placing it into a law will create a back door to bankruptcy and a huge payday for trial lawyers. If we create a fertile ground for litigious minded people this will escalate costs and limit resources, look at health care.

Unfortunately we find ourselves in an election year. Each Lawmaker is frightened to death to be challenged by their opponent for not supporting mortgage reform. Large news outlets will only cover the sound bite, not the substance and regrettably it is the sound bites that will usually decide an election.

Aubrey Clark - Aubrey is a Loan Officer in Atlanta Georgia. He also spends time as an Author and Editor for LendFast.com - Offering mortgage advice and Home Loan Calculator pages.