Found some interesting yet conflicting commentary on the bill. Here you go!
FINREG excerpt, ADIOS MTG BIZ
Feast your eyes on pg 1439:
ix) for which the total points and
fees payable in connection with the loan do
not exceed 2 percent of the total loan
amount, where the term ‘points and fees’
means points and fees as defined by Section 103(aa)(4) of the Truth in Lending
21 Act (15 U.S.C. 1602(aa)(4));
This relates to what is called "qualified mortgage" and is every fixed rate loan now being originated. EVERY FIXED LOAN
by frankenstyle July 14, 2010 8:53 AM
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It also dictates your max rate. Line 12 on pg 1436.
by frankenstyle July 14, 2010 8:56 AM
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Frank, you have a link handy to that?
by BuySide July 14, 2010 10:34 AM
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It's a bit more complicated than that. Frankenstyle, you may be looking at an older version of the measure. Below is a link to the Conference Committee version of the bill. See Title XIV of the bill starting on page 26 of that title, where it defines a "qualified mortgage". This entire bill is a real mess, but especially the mortgage provisions. Anyone voting for it needs to be voted out of office. More can be done to fix financial regulatory problems with much less legislation and gamesmanship by politicians. Call your Senator and compain if they are voting yes on this.
http://financialservices.house.gov/Key_Issues/Financial_Regulatory_Reform/Financial_Regulatory_Reform062410.html
(vii) for which the total points and fees (as defined in subparagraph (C)) payable in connection with the loan do not exceed 3 percent of the total loan amount;
‘‘(C) POINTS AND FEES.—
‘‘(i) IN GENERAL.—For purposes of
subparagraph (A), the term ‘points and
fees’ means points and fees as defined by
section 103(aa)(4) (other than bona fide
third party charges not retained by the
mortgage originator, creditor, or an affil21
iate of the creditor or mortgage origi22
nator).
‘‘(ii) COMPUTATION.—For purposes of
computing the total points and fees under
this subparagraph, the total points and
fees shall exclude either of the amounts described in the following subclauses, but not
both:
‘‘(I) Up to and including 2 bona
fide discount points payable by the
consumer in connection with the mort7
gage, but only if the interest rate
from which the mortgage’s interest
rate will be discounted does not ex10
ceed by more than 1 percentage point
the average prime offer rate.
‘‘(II) Unless 2 bona fide discount
points have been excluded under sub14
clause (I), up to and including 1 bona
fide discount point payable by the
consumer in connection with the mort17
gage, but only if the interest rate
from which the mortgage’s interest
rate will be discounted does not ex20
ceed by more than 2 percentage
points the average prime offer rate.
22 ‘‘(iii) BONA FIDE DISCOUNT POINTS
23 DEFINED.—For purposes of clause (ii), the
24 term ‘bona fide discount points’ means
25 loan discount points which are knowingly
paid by the consumer for the purpose of
2 reducing, and which in fact result in a
3 bona fide reduction of, the interest rate or
4 time-price differential applicable to the
5 mortgage.
6 ‘‘(iv) INTEREST RATE REDUCTION.—
7 Subclauses (I) and (II) of clause (ii) shall
8 not apply to discount points used to pur9
chase an interest rate reduction unless the
10 amount of the interest rate reduction pur11
chased is reasonably consistent with estab12
lished industry norms and practices for
13 secondary mortgage market transactions.
HAD ENOUGH??...
by oldbe July 14, 2010 10:55 AM
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This is the amended version:
http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_bills&docid=f:s3217as.txt.pdf
by frankenstyle July 14, 2010 11:00 AM
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So, in a nutshell, Barney Frank has succeeded in the disassembly of an industry. Unless I'm misinterpreting something.
by wherewasi July 14, 2010 11:22 AM
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correct, this basically removes any chance of a subprime product from entering back into the market based on a limit of 1.5% above the "prime offer rate"
Wasn't it yesterday that said 25% of citizens are below 599 now? Housing market, meet your doom.
by frankenstyle July 14, 2010 11:34 AM
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I think the opposite. Brokers will be limited on fees. Subprime will be originated through the finance companies that can service the loan. The Beneficials of yesterday should be making a comeback. Self Employed will be getting a cash flow loan that documents their ability to repay through bank statements. Those with big money will rule again. Originators used to today's big splits and making big money on a loan will exit.
by the voice of reason July 14, 2010 12:04 PM
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