I describe this issue at some length in my written testimony. In analyzing the problem of bad brokers, one additional obstacle Wisconsin cash loans to developing consumer remedies is the insistence of many mortgage brokers — often supported by State regulators — that they have no fiduciary obligations toward borrowers. Indeed, I have fre- quently heard the brokers claim that they are neither agents of the borrowers or the lenders and that they somehow are representing only themselves. Congress could certainly put a stop to such claims by requiring brokers to represent either the borrower or the lender and to disclose the nature of their role. I think each of these actors should be looked at separately. There certainly is a need to make explicit the legal responsibility of mortgage brokers toward the borrowers whose loans they are ar- ranging. The simplest way to do this is make clear that brokers have fiduciary relationships with borrowers.
If Congress were to do that, there would be ample common law on the duty of fiduciaries Louisiana borrow money online that would then be applicable to mortgage brokers.
I also sus- pect that lenders would prefer this approach because Louisiana borrow money online if a broker were a fiduciary of a borrower, a court would likely not charac- terize the broker as an agent of the lender.
While lenders are not ordinarily viewed as having fiduciary-like obligations toward applicants for credit, I do believe that lenders should be more accountable for the credit terms they impose in the case of loans that exceed agreed upon levels of cost. Any lender that prices a loan be- yond statutory cost thresholds should simply be prohibited from in- cluding certain features in a loan, like, for example, repayment terms that the borrower cannot verifiably afford. The best way I can answer this is to make the comparison to other dangerous products in the marketplace. While we need to educate vulnerable homeowners about the dangers, we should also be attempting to address the abusive practices directly. As for improving the disclosures that are part of the paperwork in a mortgage transaction, it is difficult for me to see this as an effective strategy. Presently there are about five or six pieces of paper in a typical transaction that contain Federally mandated dis- closures.
These papers are among the 30 or so loan documents pre- 423 sented to a borrower at a loan closing, in a paperwork stack at least an inch thick, and their usefulness is often undermined by the order of signing and the oral explanation that is provided by the party conducting the closing. Tinkering with the five or six dis- New Mexico unsecured loans closure documents is not going to effect the size or readability of the entire stack, or these other contextual impediments to the in- formation in the disclosures actually getting to the consumers. From my experience, the bad actors would be very happy to see Congress impose new disclosures and support consumer education, while leaving them free to continue the stripping of equity out of vulnerable communities. For me the important question is whether Government is ade- quately protecting those consumers who are in need of protection, not whether this protection comes from local, State or Federal pol- icymakers. Uniform protections are better than local ones, but local protections are better than none.
In April 2001, the Philadelphia City Council unanimously en- acted antipredatory lending to protect the homeowners of Philadel- phia.
Philadelphia is a home rule city that retains the power to leg- islate in all areas not preempted by State legislation. The State legislation does nothing to protect vulnerable homeowners.
Thus, for exam- ple, a consumer who gets a balloon payment prohibited by the law cannot do anything to undo the transaction.
State and local laws that protect consumers should not be preempted without ensuring that adequate Federal restrictions and remedies are in place to combat predatory practices.
Is your concern about single-premium Texas signature loans credit life insurance (SPCLI) related to the product or the marketing of the product? The product itself is overpriced because its pricing builds in too much profit for the middlemen.
Further, it is not even really known how overpriced it is, because in addition to upfront commis- sions, there are back-end revenue sharing mechanisms, which may not show up as commissions. When the profit is too great, a way will be found to sell the product. If SPCLI is removed from the marketplace, what are subprime borrowers to do when they wish to insure their financial obligations and monthly alternatives have not been approved in their States? Few borrowers who truly understood the full financial impact of SPCLI, and the often limited benefits it provides, would choose to purchase it. It is only because the full cost and the limited bene- fits are obscured, or because borrowers are fooled into purchasing it, that the product is sold. Even, an Louisiana borrow money online industry-financed study indi- cated that fully 40 percent of borrowers thought that SPCLI was required, strongly urged, or that there would be delays if they did not buy it. As for delays in State approvals of monthly alternatives to SPCLI, it is typically the providers who approach the insurance departments for approval when they want to sell the monthly alter- native.
And, once this occurs, there is no reason to expect long delays. On the contrary, for example, when Household Finance an- nounced last month that it would stop selling SPCLI in favor of monthly premium insurance, it announced at the same time that it already had obtained the approval of 34 States to offer this monthly alternative. One witness said that if you go to a Monthly Out- standing Balance basis it is more expensive than over the term of the loan.