This was a very eventful week in Washington. A 2,300 page bill passed both the senate and the house of representatives and is in line to be signed by the President in the near future. You may have also the reference to this bill as “Finreg”, “HR 4213″ or the “Dodd-Frank Bill”. First and foremost I’d be lying if I said that I have read all 2,300 pages but what I have read are the parts that concern the home owner, home buyer, the mortgage business and the general effects .
- The home owner- If you currently own a home, and you have mortgage payments, by the passing of this law you will most likely not be able to do a “no cost” loan again. The bill in essence eliminates the ability of the Loan Broker to receive compensation from the lender. Over the last 10 years I have provided the best service that I could and because of the performance of the loans that I have closed the bank paid me an additional incentive that I in turn passed on to the home owner to offset some closing costs. That helped me base my business model to be referral repeat based.
- For the first time home buyer- Similar concept than stated above. The only addition is that for the home buyer in most need of help to achieve the American Dream the lack of ability to give a credit for closing costs. This includes the Veterans, that have or currently serve our country and risk their lives, the first time home buyer that has enough of a struggle to uses most of their savings who is applying for an FHA loan which is in general significantly more expensive than a conforming loan.
- The mortgage business- With the current state of the economy, the current administration cannot afford to lose a single job. In fact, at the current pace of positive job creation of 157,000 per month according to The Brookings Institution, we are looking to a return to “normal” unemployment by the year 2015. Furthermore, 3 out of 4 jobs lie in the hands of the small to medium size business. The bill, as it stands, would shut down the entire “Wholesale” or broker business that consists primarily of small highly educated and quality individuals and eliminate the healthy competition that now exists and keep the big banks in check by not allowing them to charge astronomical “junk fees” and inflated rates even in a deflationary period.
These are times not seen since the great depression and I urge you to take action in voicing your opinion to your state senators and representatives. There are several amendments that will protect you, the consumer.
