Sen. Dodd wants to make brokers fiduciaries, kill prepayment penalties
September 6th, 2007, 7:33 am · 13 Comments · posted by Mathew Padilla, Reporter
U.S. Senator Chris Dodd (D-Conn.) introduced a bill Wednesday that would give mortgage brokers a fiduciary responsibility to borrowers and abolish prepayment penalties on more subprime loans.
Here’s what his proposal says on brokers:
“The bill will supplement state law regarding broker duties by clarifying the fiduciary duty of mortgage brokers towards the borrowers. In addition, the bill will similarly supplement existing lender liability for broker actions by requiring that where brokers are paid by the lenders through yield spread premiums, the lender would be liable for the brokers’ actions.”
Anyway, Dodd’s list of changes is long. Read it yourself by CLICKING HERE.
September 6th, 2007 at 8:53 am
If prepayment penalties go away then ALL borrowers will pay for it in their APR’s.
September 6th, 2007 at 9:21 am
OK, so let me get this straight. Sen. Chris Dodd (the one running for the Presidency) wants to tell Brokers to abolish PPP’s. First of all, I would caution anyone about listening to Chris Dodd. He seems to me to be jumping on this bandwangon as a platform. Oh, and the PPP are set up in a way to securitize the paper on Wall Street to make the package more attractive to the very people that are flowing the moeny to the borrowers. If you think we have a credit crunch now just go ahead and do away with PPP. Then people with only perfect credit will be the ones that can buy a home. Investors on Wall Street set the standards for the paper they will buy. Take away the incentives and they will take away the flow of money. This just proves that ignorant politicians should stick to what they do best. I just havent figured out what it is that they do best yet. And for a Politician to start thowing mud isnt that the pot calling the kettle black.
September 6th, 2007 at 2:47 pm
Yuck Foo -
Take a look around. Wall Street’s investment banks have already stopped flowing money to borrowers - prepayment penalties or not.
Care to try another argument?
September 6th, 2007 at 3:17 pm
Sure, your an idiot becuase there are still programs available. Higher rates but there are still programs available. 90% LTV, stated, 2×30’s. Yes, the rate is high and yes, there is a PPP. By the way, when I see you at the drive thu window please dont forget to biggie size the fries bud. Stick to what you know. Your credit must be in the dumper bud or your probably just some yuck who jumped in the biz when any idiot could do it. Now you actually have to have contacts and relationships to fall back on. The days of sitting back and letting the phone ring is over you yuck.
September 6th, 2007 at 4:31 pm
Yuck Foo -
If you’re indicative of the kind of people pushing hard money these days, I can see why the industry is in trouble.
I’ll stick to what I know, like you suggested. But you might be surprised to learn what that is.
September 6th, 2007 at 4:37 pm
The call for more government regulation is unfortunate, but not surprising. Mortgage brokers are largely responsible for getting us into this mess and should expect to bear the brunt of the public reaction to it.
September 7th, 2007 at 7:10 am
Sandstone-
The reason why I seem to be rather iritated is that people want to make general statements about whom to blame. Take your statement for instance. “Brokers are largely responsible for getting us into this mess”. When I hear statements like that it automatically tells me your mindset. Poor, inocent victems taken by the shady all too crafty Mortgage Broker. Lets take a look at what “Johnny home-owner” did with that cash out. 50k dun buggys, 70k river boats and jet skis. Why does that not make the news? I sure would like to have those toys. Buying too much house on an adjustable rate, I would like to live in Coto too. 50 inch Plasmas on the wall, I dont have a Plasma. My point, like I have said in the past. anyone that thinks they can point the finger in one direction just isnt informed. Yes there were errors in judgement going all around. When a frenzy happens that is noramlly the fuel to a frenzy, errors. People could have sold their over priced stucko box, taken the cash and moved out of state like me. Unfortunatly the person that bought my little stucko box is upside down by the tune of about 200k.
September 7th, 2007 at 11:56 am
Get rid of the PPP and it only effects the APR of people getting loans with PPP. These are largely people that would have been better off renting until they had established a good enough credit track record to be trusted with half a mill.
September 7th, 2007 at 7:04 pm
Barnes-
You may be right on that one. Most people that have PPP are going to be sub prime. We take the time with our clients to inform them of the implications on each type of loan program from option ARM to I/O. I can think of many of our clients that have been subprime and follow our advice and now have much better credit as a result. One in particular just closed on a property and is cash flowing yes cash flowing 2k a month after making the mortgage payment. He will make 24k this year alone on his rental. Why can he do this? Becuase we worked with him and didnt screw him. When I first met him he was true subprime. Now his score is through the roof and credit is cleaned up. You cant take it away from everyone because some uneducated people abused the system. Hmm, maybe we should ban bicycles because they are the number one leading cause of death for children above guns. Or, what about pools? Every summer we hear about children drowning in pools. What if there was a law saying anyone that has a pool in their home may not have children below the age of 5 becuase that is the age most children learn how to swim. Knee jerk reactions are never very good ones.
September 10th, 2007 at 3:23 pm
I am not sure about abolishing the PPPs, but I am on board with making unlicensed loan officers fiduciaries to their clients-something to which brokers and agents governed by the California DRE are already accustomed. I am also in favor of making all LO’s covered under the DOC to get licensed. Believe me man, many of the bad apples will be weeded out this way.
September 14th, 2007 at 6:43 am
Will the public ever trust a mortgage broker again? PPP were blatantly meant to lock people into a loan they could not afford in the first place. IMO government interaction is the only one to clean up this mess.
September 19th, 2007 at 11:15 pm
If stockbrokers have a fiduciary responsibility why not mortgage brokers? If you take a retirees money and put it into options, pork bellies and penny stocks and they lose it you get sued and the client gets his money back with interest.
What is the difference between a stock broker who puts his clients in unsuitable investements and a mortgage broker who knows that his clients loan is going to blow up?
No its about time that the Real Estate industry show some accountability, As a stock broker I represented either a buyer or a seller, never both. Even in the Bible it is stated that you cannot serve two masters…that only happens in Real Estate.