On May 11th the bill moved from the Senate (approved) to the House. The House has issued no recent press releases or posts to indicate status there. The title of the Senate’s Press Release about this bill is:

“SENATE PASSES BILL TO PROTECT HOMEBUYERS
Home Loan Fairness Act will target predatory lending practices, head off mortgage crisis”

What’s unclear is how the State defines “predatory” within the language of the bill.

Several people who own small mortgage brokerages have posted to this blog, noting that what this bill really does is limit working families and formerly at risk renters from ever getting their own home. A secondary effect is to weigh supply and demand in the marketplace of loans so that demand favors large banks and other institutions with far more financial resources at their disposal. These institutions are able to absorb the cost of issuing fewer loans to the public. This could result in less competition between lenders, leading to higher fees and rates for traditional borrowers.

This bill is now in the House. The Legislative Session ends June 29th. If you feel that this bill needs to be ratified carefully before being passed, to determine financial impact to both borrowers (subprime and traditional) and lenders, contact your State representative here.

There have been many comments from lenders. I would like to hear from borrowers who are looking to get into low FICO, no down payment, or stated income only loans. The default rate for these loans is currently anywhere from 12-20%. This means that 80% or more of the people who previously qualified for a loan under these criteria will not have access to a home loan.

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