However, the imposition of overly broad underwriting standards beyond these limits, such as requiring an evaluation of the maximum payment during the first seven years, are ill-founded and will unduly limit credit to Kansas payday loans online borrowers. When rates have trended downward, the average life of a mortgage has been as low as nine months. Some report recently that 30 months has been the average duration in 10 payday loans online Illinois 156 the subprime market with slightly greater than four years the average duration in the prime market. In any case, the average length of a mortgage is far shorter than the seven years required for underwriting loans under the bill. Far too prescriptive underwriting approaches like the seven year standard would bar the availability of loans with lower initial rates to those borrowers, such as military personnel, who frequently move, and deny others products that offer them the ability to get into a home and to repair their credit histories on a path to obtain lower rate loans. Additionally, by effectively barring stated income loans the bill could be detrimental to the ability of immigrants and self-employed borrowers, who sometimes have difficulty documenting their income, to obtain competitive mortgage financing.
This is notwithstanding the fact that lenders report that stated income loans, when used appropriately, perform very well.
We would caution Congress to advance very carefully in this area as stated income loans have been a meaningful way for important segments of borrowers to get mortgage Kansas payday loans online credit. Finally, while MBA recognizes and points out in its suitability paper, that hard and fast underwriting standards limit credit, such standards are preferable to subjective standards. While MBA prefers much more flexible approaches to underwriting to facilitate homeownership, it is willing to Indiana cash loans work with the subcommittee on bright-line standards, which at least have the virtue of making the rules clear. We strongly believe that this provision unfairly makes the lender liable for the acts of an independent mortgage broker over which the mortgage lender has no control and which may have occurred before the lender purchased the mortgage. If Congress wants to create greater broker accountability, a sentiment we support, we strongly urge that better licensing, clear disclosure and the establishment of precise standards applicable to independent brokers are the most effective means to that end. STEPS CONGRESS CAN TAKE TO PROTECT CONSUMERS There are at least three things Congress can do to help consumers become better informed through the mortgage process, protect themselves and help them make the best choice for themselves.
It would be a worthy undertaking to conduct a review of total government efforts Oklahoma cash advance in the area of financial literacy to see what is working is what is not. This study could also include the amount of resources expended for this purpose. MBA believes that better financial education would empower all borrowers to shop effectively among the array of competitors in the marketplace. Second, MBA believes simplification of the mortgage process and all necessary consumer information would make it much easier for an empowered consumer to navigate the market, and such improvements are long overdue. We commend to the Committee the fact that Federal Trade Commission staff just issued a comprehensive study that strongly supports this view.
Efforts at improvement need to streamline the existing mandated disclosures and information, and must be comprehensive and well considered. A successful effort would result in much more effective information on the benefits, costs and features of the loan options presented by lenders.
This approach would also go a long way to help borrowers shop for mortgages among loan providers, increasing their ability to make an apples-to-apples comparison. Such a disclosure would alert the borrower in cases where the broker is not an agent that the borrower should either shop for himself or risk higher mortgage costs. Moreover, if a mortgage broker holds himself out as an agent, MBA believes it is appropriate to consider him an agent as a legal matter. Notably, MBA does not believe that a disclosure of function and fees is warranted for mortgage lenders. The lender does not hold himself out as an agent of the borrower. While a lender must serve its customers fairly, and the industry has done much to assure high professional standards, a lender owes a duty to its shareholders and investors. A borrower knows a lender offers its own products and does not offer to shop for borrowers. Pappalardo of the Federal Trade Commission (June 2007). Also, as has been pointed out, in some states, the standards for licensing a hair dresser are more rigorous than those applicable to mortgage brokers. MBA supports national, uniform regulation of mortgage brokers including a national database of approved brokers.
A clear, fair national regulatory standard for mortgage brokers is an essential step to establishing much better mortgage lending protections for borrowers. Third, uniform lending standards applicable to all originators that are clear and objective, but do not unduly restrict the market, would improve consumer protections to stop lending abuses. These standards must be national in scope to enhance competition in all markets for all borrowers, especially nonprime. Such standards will allow all borrowers to benefit from greater choices, competition and lower prices that a fair and fully Kansas payday loans online functioning market brings. MBA would support the expansion of the types of loans to be covered in a uniform national standard to include purchase money loans and open-ended lines of credit. INDUSTRY EFFORTS TO HELP CONSUMERS While working with policymakers to address the transformation in the mortgage market, MBA and its partners are leading the way to help stabilize and preserve the subprime mortgage credit system, provide assistance for homeowners facing foreclosure, and finally, prevent this from ever occurring again. MBA has met with Fannie Mae and Freddie Mac, with FHA, with Kansas payday loans online our largest servicers, consumer groups and civil rights leaders to search for solutions. We did so both separately and as a participant in a housing summit convened by Senate Banking Committee Chairman Christopher Dodd where an agreement was reached on principles for mortgage lenders and servicers to assist troubled borrowers. MBA also has partnered with NeighborWorks America, a national nonprofit organization created by Congress, to help troubled borrowers. Specifically, MBA has dedicated financial and staff resources to help promote a free counseling hotline, 888-995-HOPE, which is staffed by the Homeownership Preservation Foundation and provides a helpful place for troubled borrowers to turn. In addition, through the partnership, we hope to establish foreclosure intervention programs in cities with high rates of foreclosure and to conduct a national public education campaign with the National Ad Council to improve contact rates for homeowners in financial distress.
The partnership also seeks to improve counseling capacity and provide certified training programs for foreclosure counselors through the NeighborWorks Center for Homeownership Education and Counseling (NCHEC).
Conclusion MBA members have worked hard to put Americans in homes, facilitating the development of communities, increasing consumer wealth and improving the stability of families across the nation.