Oregon Mortgages

States Get Involved in the Subprime

Well amidst all of the Subprime and even Alt-A problems it appears that states are trying to help solve the problem in their own communities. 30 states have introduced some sort of legislation that would help protect the consumers from Subprime Mortgages.

New Jersey introduced a legislation that would limit the ability of Mortgage Professionals to charge above market rates as well as prepayment penalties. “If Washington isn’t going to act, the states are.” Gov. Michael F. Easley of North Carolina.

Maryland, Massachusetts, New Jersey, New York, Ohio and Pennsylvania have all rolled out programs that help refinance home owners currently at risk with their current mortgage. They are using proceeds from state bonds as well as federal lending agencies which are accounting for roughly $500 million. That sounds like a great deal of money (and of course it is) but that will only help a small amount of people.

These CAN be good things for consumers. Someone does need to help limit was people can do. I think that there will have to be some very in dept conversations & literature on how these programs should work. I personally have no problem with this because if there is a way that I can put even my subprime borrowers into a 30 year fixed with no prepayment penalty I do so. I always explain to them that this at least gives them the option to refinance their home IF and WHEN they want to. Even if the rate is a little bit higher than say a 3 year arm. I’m not so much against the prepayment penalties if the loan IS a 30 year fixed mortgage. That one can help lower their rate a bit and might not be a bad idea. At least they still have the comfort of being in a 30 year fixed rate program and don’t have to worry about their payment skyrocketing. It gives them the luxury of being able to sleep at night knowing that their mortgage is safe!