The Mortgage Reform and Anti-Predatory Lending Act of 2007 was introduced to Congress on October 22, 2007 by Rep. Bradley Miller (D-N.C.) and co-sponsored by 16 members of the House including Financial Services Committee Chairman Barney Frank (D-Mass.). This act is a proposal to eliminate the Yield Spread Premium (YSP) paid to mortgage brokers by lenders. In affect, it removes the borrower’s flexibility to adjust the amount of cash required at closing in the form of points, services and closing fees.
The rules regulating mortgage brokers and mortgage bankers have already been shifted in favor of mortgage bankers. In 1992, HUD established a requirement for mortgage brokers to disclose the yield spread premium (YSP) on the good faith estimate and again on the HUD-1. However, mortgage bankers were not required to disclose the yield spread premium (YSP).
For homeowners, the yield spread premium allows them to refinance a home without paying for fees or points out of pocket. The yield spread premium is a means by which borrowers can finance closing costs through the interest rate and limit the amount of out of pocket funds necessary for closing. For new home buyers the yield spread premium allows them to finance a home and possibly have more funds to make a down payment, perhaps enabling them to eliminate mortgage insurance, and/or to have more cash to pay for household items. Everyone using a mortgage broker is thereby hurt by this legislation.
This legislation will significantly increase the costs of financing a home for the millions of consumers who choose to use a mortgage broker in the future. I personally believe that the elimination on the broker's compensation will create less competition in the mortgage business, generate higher rates and fees for consumers, and drive many small business mortgage brokers out of business.
What are thoughts about the Mortgage Reform and Anti-Predatory Lending Act of 2007?
Article provided by: HomeYeah.com Mortgage
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