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Mortgage Lending Regulations Approved



Federal Reserve Approves Regulations

According to RECON:

WASHINGTON- (Reuters, The Federal Reserve yesterday approved regulations requiring mortgage lenders to tell borrowers how much interest rates differ between prime mortgages and the higher-priced ones offered to less-affluent borrowers.

New Regulation C rules will require disclosures to prospective borrowers if the difference between prime and subprime rates is equal to or greater than 1.5 percentage points on a first-lien loan or greater than 3.5 percentage points on a second mortgage.

So What?

Does this change anything? Is this a step in the right or the wrong direction? Should this have been done earlier or not done at all? How do you see this changing lending or real estate for that matter?

Lani is the Chief Operating Officer at The American Genius - she has co-authored a book, co-founded BASHH and Austin Digital Jobs, and is a seasoned business writer and editorialist with a penchant for the irreverent.

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  1. Lisa Sanderson

    October 22, 2008 at 5:24 pm

    If that’s the sum total of the new Regs, I don’t see it as being much help. Most of the ‘good’ lenders explain this to borrowers already anyway.

    Even though I don’t have a clue how it could be done, I’d like to see them find a way to prevent lenders from throwing in zingers at the 11th hour when the chances of the buyer walking are negligible. This has been the most egregious thing I’ve seen over the last several years-promising the world and then saying ‘oh sorry, you’ll have to suck it up’ (rate changes, extra points, whatev) when they’ve already moved out of their house, made major financial commitments or whatever.

  2. Paula Henry

    October 22, 2008 at 6:29 pm

    Lani – I don’t see it making much of a difference. Many who bought using subprime loans knew what they were getting into – they just believed the ride would last long enough for them to cash out and make big bucks.

    Like Lisa, I would rather see a lender who keeps their word, doesn’t change rates and can get a loan closed on the day it is supposed to close.

  3. Steve Simon

    October 23, 2008 at 5:41 am

    We have had better luck than a lot of folks with area lenders, especially considering we are in The Tampa Bay area.
    The last five or six loans were quoted pretty much where we thought they should be and then we float until you get a feel of what is going to happen; locking in when it moves in the right direction.
    However these were for borrowers with no negatives in their history (some with a short history, but no black marks).
    Given the internet’s ability to transfer info. quickly I don’t see many savvy buyers not knowing that there is something “Rotten in Denmark” without this new reg. If you’re going to tell me there are buyers that are not smart enough to call around for rates and check the net for deals before they sign, then I’ll tell you thatdisclosure to them will be meaningless as well (they may be good people, but they have no idea of what they are doing).
    Eleventh hour changes happen to the uninformed by those with lack of integrity. That will not stop because of this reg.; just another form to be added to the pile…
    Just my thoughts:)

  4. Todd

    October 23, 2008 at 6:44 am

    Would love to hear from Jeff Corbett on this particular subject.

    How does one evoke an Agent Genius staff writer and cause them to make a comment, anyway?

  5. JeffX

    October 23, 2008 at 3:06 pm

    Hey Todd…

    Many states have adopted this type of disclosure for a few years now, so while its nice to see the Fed adopt similar rules, I’m afraid the new Reg C disclosure requirements are a little late to the game (surprise).

    This disclosure would have been more effective when there was still a thriving Sub-Prime and Alt-A market. Back in the day it was typically far easier to get approval for and originate a Sub-Prime or Alt-A loan compared their Conforming (Fannie and Freddie backed) cousins. These ‘less than Prime loans’ were also typically more profitable for the mortgage professional as they paid better in back-end fees.

    ‘Easy’ and ‘pays better’ would often trump what would have been a better loan for the consumer…so you can see the clear conflict of interest and thus the practical implementation of such regulation.

    Today however, sub-prime and alt-a loans are endangered species underwritten with far more scrutiny and typically have caps on how much in back-end fees a mortgage professional can make, so the ‘Easy’ and ‘Pays Better’ features have all but evaporated.

    There are always exceptions but IMHO Reg C is a few years late and billions short. Markets tend to correct themselves before legislation does…alas, it makes nice press for a maligned Federal Reserve 🙂

  6. Matt Stigliano

    October 23, 2008 at 5:24 pm

    Let me speak from the consumer side of life. Ok, so it would be nice to know how much I’m getting charged for not being the best of customers, so I see the benefit to the consumer. But here’s where I get mixed feelings. Consumers, don’t always want to pay attention to the details. Although a lender may go over this with them, it may go in one ear and out the other, much like the fact that “your ARM will adjust in x years” did for some. While I am not here to bash the consumer, I am here to make it clear, that some people who want a house, will sign what it takes to get them there, even if it is unresponsible. As much as I know that there are lenders, agents, title companies, etc. out there who weren’t looking out for their clients and allowed them to sign off on bad purchases without the slightest mention of “let’s take a look at this”, I have to say that there were also consumers who would sign anything to get a house (it was the “in” thing to do).

    I’m not bashing anyone, so please don’t misunderstand what I’m saying…its just that I know how it is.

    My first house was a terrible loan (compared to what was available at the time to the “average consumer”) because I had tons of cash and bad credit (and it was your typically overpriced Los Angeles home). My loan now is at a high interest rate, because I went with a no-doc loan, thanks to 14 years of self-employment and the ups and downs of the music industry. The difference is that I knew I could afford it, even though its too expensive compared to what I should be paying for my loan. I weighed the pros and cons of a not so great loan and the pros were better than the cons. I don’t think telling me what “the guy next door” could get this loan for would help me make my decision really.

    My point is that at the end of the day, people want the house and will do what they can to get it. Not all people will do ANYTHING to get it, but many will do A LOT to get it…so disclosing this becomes nothing more than an “I told you so” for when things go wrong.

    That’s my two cents.

  7. Nina Sutherland

    October 13, 2009 at 5:19 am

    The Regulation C also states that lenders do not have to inform whether an loan or application involved a request for pre-approval or were associated with a manufactured property.

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Is the real estate industry endorsing Carson’s nomination to HUD?

(BUSINESS NEWS) Ben Carson’s initial appointment to HUD was controversial given his lack of experience in housing, but what is the pulse now?



NAR strongly backs Dr. Carson’s nomination

When President-Elect Donald Trump put forth Dr. Ben Carson’s name as the nominee for Secretary of Housing and Urban Development, NAR President William E. Brown said, “While we’ve made great strides in recent years, far more can be done to put the dream of homeownership in reach for more Americans.”

At the time of nomination, the National Association of Realtors (the largest trade organization in the nation) offered a positive tone regarding Dr. Carson and said the industry looks forward to working with him. But does that hold true today?

The confirmation hearings yesterday were far less controversial than one would expect, especially in light of how many initially reacted to his nomination. Given his lack of experience in housing, questions seemed to often center around protecting the LGBT community and veterans, both of which he pledged to support.

In fact, Dr. Carson said the Fair Housing Act is “one of the best pieces of legislation we’ve ever had in this country,” promising to issue a “world-class plan” for housing upon his confirmation…

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Job openings hit 14-year high, signaling economic improvement

The volume of job openings is improving, but not across all industries. The overall economy is improving, but not evenly across all career paths.



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Job openings hit a high point

To understand the overall business climate, the U.S. Labor Department studies employment, today releasing data specific to job vacancies. According to the department’s Job Openings and Labor Turnover Survey (JOLT) for April, job openings rose to 5.38 million, the highest seen since December 2000, and a significant jump from March’s 5.11 million vacancies. Although a lagging indicator, it shows strength in the labor market.

The Labor Department reports that the number of hires in April fell to 5 million, which indicates a weak point in the strong report, and although the volume remains near recent highs, this indicates a talent gap and highlights the number of people who have left the labor market and given up on looking for a job.

Good news, bad news, depending on your profession

That said, another recent Department report notes that employers added 221,000 jobs in April and 280,000 in May, but the additions are not evenly spread across industries. Construction jobs rose in April, but dipped in professional and business services, hospitality, trade, and transportation utilities. In other words, white collar jobs are down, blue collar jobs are up, which is good or bad news depending on your profession.

Additionally, the volume of people quitting their jobs was 2.7 million in April compared to the seven-year high of 2.8 million in March. Economists follow this number as a metric for gauging employee confidence in finding their next job.

What’s next

If you’re in the market for a job, there are an increasing number of openings, so your chance of getting hired is improving, but there is a caveat – not all industries are enjoying improvement.

If you’re hiring talent, you’ll still get endless resumes, but there appears to be a growing talent gap for non-labor jobs, so you’re not alone in struggling to find the right candidate.

Economists suspect the jobs market will continue to improve as a whole, but this data does not pertain to every industry.


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Gas prices are down, so are gas taxes about to go up?

Do low gas prices mean higher gas taxes are on the way? Budgeting for 2015 just got a bit more complicated, if some politicians have their way.



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Gas taxes and your bottom line

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Supporters and opponents are polar opposites

Supporters argue as follows: gas prices are low, so it won’t hurt to increase federal gas taxes, in fact, those funds must go toward improving our infrastructure, which in the long run, saves Americans money because smoother roads mean better gas mileage and less congestion.

Gas taxes have long been a polarizing concept, and despite lowered gas prices, the controversial nature of the taxes have not diminished.

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Is a gas tax politically plausible?

Mooney writes, “So, this is not an argument that a gas tax raise is politically plausible — any more than a economically efficient tax on carbon would be. It’s merely a suggestion that — ignoring politics — it might be a pretty good idea.”

Rendell noted, “The World Economic Forum, 10 years ago, rated us the best infrastructure in the world,” adding that we “need to do something for our infrastructure, not in a one or two year period, but over a decade.”

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