SALT LAKE CITY – Many Utah homeowners this year are thankful for signs of a recovering housing market and new rules limiting uncontrolled fees linked to the mortgage meltdown. But legislation in Congress would roll back some consumer protections, making it more costly for Utah home buyers.
The new rules are working to ensure that banks don’t issue mortgages to borrowers who aren’t capable of repaying, said Gary Kalman, executive vice president of the Center for Responsible Lending. However, he added, the legislation known as the “Mortgage Choice Act” – <a href=”https://www.govtrack.us/congress/bills/113/hr3211″ target=”parent”>HR 3211</a> and <a href=”https://www.govtrack.us/congress/bills/113/s1577″ target=”parent”>S 1577</a> – would undermine what he considers a fair and balanced compromise.
“There are many lenders and even banking trade associations that said they can live with the rule as is,” he said. “There’s just certain players that are trying to squeeze out every last dollar from a borrower that they can.”
Current policies scheduled to go into effect Jan. 10 would cap “points and fees” for mortgages at 3 percent of the total loan amount.
If the Mortgage Choice Act passes, the 3 percent cap on fees set to go into effect in January goes away.
Backers of the Mortgage Choice Act argue the current regulations are too stringent and changes are needed to clarify the definitions of “points” and “fees.”
Kevin Whelan, campaign director of the Home Defenders League in Minneapolis, said the cap ensures lender profitability without hidden fees that drive up home-buying costs. He said Minnesota families still are hurting from previous lending practices that weren’t supposed to continue.
“I’ve seen home ownership and community well-being stripped from families by the deliberate campaign of predatory and deceptive lending by the big banks, and by people that were working in collaboration or collusion with big banks,” he said.
Kalman said nothing in the legislation would benefit homebuyers. In fact, he added, he believes new policies are needed to ensure the housing market – which is key for the entire economy – recovers for individual home owners, not just banks or private investors.
“The housing market is a $10 trillion market,” he said. “Stability, certainty is what the lenders are going to need in order to make sure that the market continues to grow.”
Track HR 3211 and S 1577 <a href=”https://www.govtrack.us/congress/bills/113/hr3211″ target=”parent”>here</a> and <a href=”https://www.govtrack.us/congress/bills/113/s1577″ target=”parent”>here</a>.