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[ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] Re: Need to consider the strictures of anti-predatory loan rules... Posted by jenv on March 30, 2004 at 11:52 PM In Reply to: Re: Need to consider the strictures of anti-predatory loan rules... posted by whyK on March 30, 2004 at 7:56 PM What's their interest rate? Consider the Home Equity Protection Act: A key provision of the Act prohibits high-rate, high-fee mortgage lenders from engaging in the pattern or practice of extending credit solely on a homeowner's equity without considering the borrower's ability to repay the loan. Lenders will be required to consider the consumer's current and expected income, any outstanding obligations, and employment status when lending against the home. These new requirements were imposed to eradicate the practice of promising loans to the unemployed or people with poor credit simply because they have equity in their homes. From http://www.consumersunion.org/finance/home-ca5.htm While these rules ostensibly protect homeowners, I believe in practice they hurt homeowners. If you're in foreclosure or unemployed, a bank will demand a high interest rate to compensate for the risk. If their required interest rate exceeds the cap, they can't lend on equity and the homeowner will likely lose their house because they couldn't borrow to keep themselves afloat long enough to find another job or forestall foreclosure long enough to sell. Ignoring for the moment the insulting paternalism of the Act, letting a homeowner drown because they can't use equity to get themselves above water is a rather twisted way of helping them. Follow Ups: Post a Followup: Name : E-Mail : Subject : Comments: : What's their interest rate? Consider the Home Equity Protection Act: A key provision of the Act prohibits high-rate, high-fee mortgage lenders from engaging in the pattern or practice of extending credit solely on a homeowner's equity without considering the borrower's ability to repay the loan. Lenders will be required to consider the consumer's current and expected income, any outstanding obligations, and employment status when lending against the home. These new requirements were imposed to eradicate the practice of promising loans to the unemployed or people with poor credit simply because they have equity in their homes. : From http://www.consumersunion.org/finance/home-ca5.htm : While these rules ostensibly protect homeowners, I believe in practice they hurt homeowners. If you're in foreclosure or unemployed, a bank will demand a high interest rate to compensate for the risk. If their required interest rate exceeds the cap, they can't lend on equity and the homeowner will likely lose their house because they couldn't borrow to keep themselves afloat long enough to find another job or forestall foreclosure long enough to sell. Ignoring for the moment the insulting paternalism of the Act, letting a homeowner drown because they can't use equity to get themselves above water is a rather twisted way of helping them. Optional Link URL: Link Title: Optional Image URL: [ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] WWWAdmin 2.0a © 1997 Matt Wright and DBasics Software Company, All Rights Reserved

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