New Rules for Mortgage Companies?

In order to stop the surge of home foreclosures, there are a numerous bills headed to Congress to try and curtail mortgage companies from selling home loans that are high risk to borrowers. What bills are being presented and how could they affect your new home loan?

Escrow, Appraisal, and Mortgage Servicing Improvements Act

In mid October, Rep. Paul E. Kanjorski, D-Pa presented the Escrow, Appraisal, and Mortgage Servicing Improvements Act. This act would require mortgage companies to set up escrow accounts for taxes and insurance for homeowners who had sub-prime mortgage loans on their homes. To keep borrower's monthly costs down, many mortgage companies sold adjustable rate and option arm loans without setting up impound accounts. While homeowners enjoyed a low monthly mortgage payment, many began to struggle when annual and semi-annual taxes and insurance payments were due. When their mortgage payments converted from their initial low interest rates and began to adjust upwards, many homeowners simply could not afford their mortgages.

Anti Predatory Bill

Another bill that will affect mortgage companies is an anti predatory bill introduced on October 22nd. This bill would require all loan officers to be licensed and registered with the state. Currently this is not the case; homeowners who have been victimized by an unlicensed loan officer at a mortgage company have little recourse. Another thing this bill would require is that your loan officer be accountable--loan officers will be required to verify the mortgage loan that they are selling you is one that you can afford.

Hopefully these two bills will offer some safety and security for homeowners looking for a new mortgage. In the meantime, if you need a home loan make sure your loan officer is licensed and is with a reputable mortgage company.

About the Author
Sheryl Landrum is a Senior Loan Officer with First Capital Mortgage, in San Diego, California and a freelance writer on mortgage issues.

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