January 21st, 2010 3:24 PM by Daniel Poulos
I've got more ranting to do!
Well, the new RESPA guidelines have taken effect in the name of consumer protection. Unfortunately, lenders aren't yet sure of how to comply so, to err on the side of caution they are putting originator's through the wringer to get any loans closed. If the people who passed these new laws really understood the end effect they would make it illegal for them to serve as lawmakers.
Here's the real kick in the teeth. I understand that the general public is no match for those who would use every opportunity to prey on them and that the government must play a protective role. While no one was enforcing the rules already in place and due diligence and quality control took a backseat to misrepresentation and greed, unscrupulous mortgage originators and lenders got rich. Now those opportunistic predators are gone, the lenders remain supported by our tax dollars and who is left to suffer the wrath of overzealous lawmakers? That's right, the local mortgage companies that managed to weather the storm and continue to operate based on the reputations they spent years building as well as qualified families trying to buy new homes.
So now regulators come up with a new 4-page Good Faith Estimate of Closing Costs with many zero tolerance line items. It is strewn with mandated time lines that insure that mortgage lending cannot be done in a timely manner. To their credit the forms contain more plain English, but how many borrowers are going to take the time to read the new 68 page "Shopping for Your Home Loan – HUD's Settlement Cost Booklet". Booklet??? Are you kidding me?
Responsible mortgage brokers who have always clearly explained all options and disclosed all charges are used to having the borrower acknowledge that they understand the disclosures and attest to it with their signature. Regulators have decided that they are better at getting the information across with 4 page Good Faith Estimates and 68 page "booklets". But, get ready for this; the new disclosures don't have to be signed by the borrowers!
This is all to similar to the way that the Home Value Code of Conduct passed last year crippled the mortgage approval process, limited borrowers options and caused consumers to have to pay for multiple needless appraisals, but don't get me started on that again…
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