HR1728 Mortgage Reform and Predatory Lending Act

In my last communication I neglected to mention one important detail neither the President or Congress have approved this bill at this time. When I get close to 100 emails in one day on a new piece of legislation, I generally don't jump on the band wagon and respond impulsively, as what normally happens is that when the hype is eliminated the truth is revealed. As Attorney Jeffrey Hare commented "the sky is not falling".

Jeffrey also shared the following insights:

HR1728 (not 1787 as reported frequently by some) is a very lengthy and overstuffed piece of legislation that aims to tackle a wide range of perceived, alleged and real problems associated with mortgages, predatory lending. The National Association of Realtors has taken what appears to be a position of qualified support on this legislation, but notes that restrictions that require sellers providing seller financing – which they point out plays an important and necessary part of the financing of home purchases – to comply with the range of complex regulations is probably not in the best interests of the legislation, and has asked Congress to clarify this section.

For a short summary, click here and just spend a minute reviewing what the legislation covers.

Attorney Bill Bronchick had this to share:

This bill aims to include owner financed deals within the definition of "Truth in Lending" law. I've always instructed in my courses and seminars that you should comply with Truth in Lending, which requires just a few simple disclosures.

The bill also would, in theory, make a person who sells a home a "mortgage originator". This would require compliance with RESPA, which I've always instructed in my courses and seminars that you should comply with anyway.

Finally, the bill would require that you actually qualify your buyer. It prohibits, "lending without due regard of the mortgagor's ability to repay". Duh! Only a fool would put someone in an owner financed house deal without checking their income, debt and credit.

All in all, there's nothing to worry about here for investors, it's just a matter of compliance with some federal rules and a couple of disclosures.