Financial Reform Bill Gives Nod to Simple Loans
Under the proposed financial reform compromise bill, a mortgage lender would have to keep 5 percent of each mortgage when it is securitized, unless the mortgage is a plain vanilla type of loan that the government dubs a “qualified residential mortgage.”
Analysts believe that such an incentive is means that the mortgages available to most borrowers will come from conventional institutions like banks. If more exotic loans are available, they will be offered by private lenders that charge significant fees to take these risks.
Source: Bankrate.com, Holden Lewis (06/29/2010)
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Senate Passes Financial Reform Bill
The Senate on Thursday approved the most extensive overhaul of the banking system since the 1930s.
The legislation must still be reconciled with the House bill passed in December.
Measures in both bills that directly affect property transactions include:
* Limits on the ability of mortgage lenders to penalize borrowers who pay off loans early.
* Stated-income loans would be effectively eliminated.
* Lenders would be required to obtain proof from borrowers that they can pay for their mortgages. Buyers would be required to provide tax returns, payroll receipts, or bank documents.
* Lenders and brokers will be prohibited from pushing borrowers to accept loans with higher interest rates or with risky features.
Source: The New York Times, Gregg Hitt and Damian Paletta (05/20/2010)
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