H.R. 1728: The Death of Creative Financing

H.R. 1728 passed the House by an overwhelming majority in a record three days time. Now it’s in the Senate and is widely expected to pass quickly as well. Why the rush? Is AIG planning to hand out zillions in bonuses again?

My guess would be that our elected representatives and their banking benefactors would prefer that we don’t know anything about it.

Consider this scenario:

You own a house. You want to sell it.

Someone wants to buy it.

You decide to sell it to the person who wants to buy it and carry the paper yourself for whatever reason. Maybe you want the income instead of the cash. Maybe you’re just particularly fond of the buyer, I don’t know.

I’m sorry… you can’t. It’s illegal.

Huh? Excuse me. It’s my house… Why can’t I sell it to whomever I choose, however I choose.

Nope, sorry. You’ll have to become a “lender” and get a lender’s license.

Why? I’m not a lender.

Well, because you’re only allowed to sell your own house once every three years without going through the bank for a mortgage. And there are a lot more rules than that, believe it or not.

It has to be a 30-year, fully amortizing loan and you must comply with RESPA regulations, provide Truth in Lending documentation, and “verify” that the borrower is able to repay the loan, just like the banks don’t.

You can read the bill for yourself… I’m going to stop right here for a moment.

The moniker for the HR 1728 bill is the Mortgage Lending and Anti-Predatory Lending Act, so it sounds absolutely fabulous, doesn’t it? It sounds like something we’ve needed for a long time… a bill to stop “predatory lending”. Who could possibly be against that?

(Before I go on, I’d like to register my extreme displeasure at being treated like I’m four years old by our elected representatives. They obviously believe that I’ll be happy to eat cow pies if they’ll just call them Ding Dongs.)

Look, obviously this is an important piece of legislation. After all, just look at what caused this unstoppable catastrophic meltdown in the first place. If it weren’t for a bunch of individual homeowners selling their own homes to other people and carrying back the paper themselves we never would have gotten into this mess in the first place. Those sellers obviously have to be stopped.

There’s another clause in this bill that I found absolutely unbelievable. The bill says that if you own rental units and the government decides that you’re at risk of foreclosure, the government can seize your property… before you’re foreclosed on, mind you. Someone wakes up in the morning and decides that you might lose your units to foreclosure, and you are screwed.

You want time to go over that one again? It’s perfectly understandable if you do.

What it said was that the legislation makes it possible for the government to seize your rental units if they deem that you are at risk of losing the property to foreclosure. I assume the intent is to prevent renters from being put out of their rented homes, which is perfectly understandable because everyone knows that it’s only okay to put actual homeowners out of their homes.

Now, I know that usually I like to go into some level of detail on these types of things, but this time I’m keeping it short and sweet. A memo ought to do it…

Memo to the Members of the U.S. Politburo… I mean Senate:

Don’t even think about it. It’s none of your Goddamn business who I sell my house to, and if I want to get paid in marbles over 16 months with a 5,000 Twinkie balloon payment at the end of a year ending in 7, I don’t give a rat’s right foot what you guys in congress think about it. Want to know what else… get your lazy, self-important asses back to working on something that’s actually a problem, because we’ve got plenty of those and a big part of why we have plenty of those is that you guys can’t seem to stay focused on anything important for more than an hour or so. If you want to blow the banking lobby, do it on your own time… got it?

Now, back to the rest of us. Let’s get serious here. This is crap and we all know it. But the banking lobby is going to just keep throwing their heft around as they please until we put our collective foot on someone’s neck. I’m serious about this. If we don’t.. what’s next? You can’t sell more than one of your cars every eighteen months without becoming a car dealer, and providing floor mats?

People, we have HUGE problems that no one in our government has even come close to solving and this is what they’ve got time to work on? If we just sit back and say… “Oh well,” then we deserve everything we get in the future.

Remember AIG bonuses? We had congress jumping all over the place like they had ants in their pants over those bonuses. One week of pitchforks and torches and they were passing “90% Bonus Tax” legislation. Let’s flex our muscles on this piece of crap bill, and maybe after a time or two, our elected representatives will realize that we’re not playing around here.

Look… if you don’t agree, here’s what Sen. Barbara Boxer authored to add to a bill about a week or two ago:

A provision authored by Sen. Boxer requires homeowners to be alerted within thirty days if their lender sells or transfers their home mortgage loan. The measure would help homeowners whose efforts to avoid foreclosure have been complicated because they can’t find out who owns their mortgage. “Homeowners have the right to know who owns their mortgage,” said Sen. Boxer. “This measure will give homeowners another tool to fight unlawful foreclosures and renegotiate their loans so they can stay in their homes.”

Well… it’s about time. That’s exactly why my best friend lost his home… he couldn’t find out who owned his mortgage. It was soooo frustrating. They never even foreclosed. Finally, after missing five payments, he just gave up and moved out.

See what I mean. It’s out of Goddamn control over there. We have hundreds of bankrolled idiots running things in D.C. and they don’t even think there’s anything wrong.

Let’s let each of our respective senators know that if they even consider voting for this bill, we will all be actively campaigning against them Obama-style in their next election… no matter which party they’re attending.

Unemployment’s going through the roof, and we’ve had 1 million foreclosures since January 1, 2009. Fix that, you grandstanding morons. And leave my house alone. Don’t worry… the way things are going the bank will have it back soon enough.

And on a more serious note, in the years to come, seller financing will be the only way that hundreds of thousands of Americans can buy houses, so in terms of our eventual economic recovery, this bill can only hurt.

Here’s a link to the bill if you want to read it: http://www.govtrack.us/congress/billtext.xpd?bill=h111-1728

Let’s send each of our respective senators pairs of kneepads, and a map to the banks in their area. Seriously.

Comments

  1. lotzahomes says

    I'm going to say a few things and you can all agree with me or not. Either way, I really don't give a shit. These are my personal opinions and as of today, Thursday, June 11th, 2009 10:50 PM MST, my first amendment rights are precariously still intact.

    I will try to be succinct, for fear the stroke of midnight will usher in a new law (shoved up my ass) that will prohibit me from both thinking and speaking my views.

    Enough of the fucking help already! Please just leave me alone! I'm sorry, but a government that can't even make a profit running a whore house doesn't exactly instill in me the confidence, I believe, is necessary for me to contemplate any advice about the manner in which I should be required to sell my home.

    The last time you were vigilantly protecting me against predatory lending, you allowed the Countrywides of America hose the taxpayers out of a trillion dollars. Since that time, my house has lost in excess of 50% of its value and is currently in free-fall. I can't take it anymore...Please leave me alone...I'm begging you!

    If you insist on stripping me of my rights, at least tell me that your proposed new laws will also apply to your newest and bestest friends at Pennymac.

    Please tell me, with a straight face, you won't allow millions of dollars of real estate to be routiney purchased for pennies on the dollar (which the banks have already been paid for), assumed (without qualifying) with a 3% downpayment and non-recourse provisions.

    Ok...you can pull it out now.

  2. mandelman says

    lotzahomes...

    Oh come on... but they're just trying to help. Next they're going to help you out of whatever money you have left. I cannot wait. But don't worry, soon no one will make more than $250k a year, so we'll all get free health care at the Post Office.

    Mandelman

  3. Musburger says

    where in the bill does it talk about the gov't seizing rental units?

  4. title_gal says

    Another great one! Once again I hate to post it on my facebook

  5. mandelman says

    title_gal wrote:
    Another great one! Once again I hate to post it on my facebook



    Title Gal...

    You "hate" to post it on your Facebook"? Why do you HATE to post it on your Facebook? And did you hate to post something I wrote on your Facebook before?

    I'm hoping you meant "HAVE" to post it on your Facebook. Am I right?

    Mandelman

  6. mandelman says

    title_gal wrote:
    Another great one! Once again I hate to post it on my facebook



    Title Gal...

    You "hate" to post it on your Facebook"? Why do you HATE to post it on your Facebook? And did you hate to post something I wrote on your Facebook before?

    I'm hoping you meant "HAVE" to post it on your Facebook. Am I right?

    Mandelman

  7. lotzahomes says

    Well, let's see...they've helped me out of my retirement funds, my kids American dream and my grandchildrens American dream.

    Things are pretty tough now, but I'm not bitter. Mr. Obamas tax freeze for people in my income bracket will get me through the next 4 years. And then.....It's EASY STREET! Social security checks, government health care and scotch on the rocks! It's gonna be GREAT!

    Only in America baby...Only in America!

  8. mandelman says

    Musburger wrote:
    where in the bill does it talk about the gov't seizing rental units?


    Musburger...

    Did you find it yet? If not, I'll post it. It's an add on addendum that was included recently. It's not part of the bill.

    Mandelman

  9. title_gal says

    mandelman wrote:
    title_gal wrote:
    Another great one! Once again I hate to post it on my facebook



    Title Gal...

    You "hate" to post it on your Facebook"? Why do you HATE to post it on your Facebook? And did you hate to post something I wrote on your Facebook before?

    I'm hoping you meant "HAVE" to post it on your Facebook. Am I right?

    Mandelman


    LOL Yes, I meant I had to post it on my facebook! It was great and the world needs to see it.

    Sorry about the typo!

  10. mandelman says

    title_gal wrote:
    mandelman wrote:
    title_gal wrote:
    Another great one! Once again I hate to post it on my facebook



    Title Gal...

    You "hate" to post it on your Facebook"? Why do you HATE to post it on your Facebook? And did you hate to post something I wrote on your Facebook before?

    I'm hoping you meant "HAVE" to post it on your Facebook. Am I right?

    Mandelman


    LOL Yes, I meant I had to post it on my facebook! It was great and the world needs to see it.

    Sorry about the typo!


    Whew... that's a relief? lol...

    Thanks Titley!

    Mandelman

  11. dwill3423 says

    As to the ownership of a mortgage there are only three major possibilities; Fannie Mae(Conventional Loans), Freddie Mac(FHA Loans), and Ginnie Mae(VA Loans).

    As to the company collecting payments, called the Servicer, there are more than there are banks.

    The servicing rights can be sold many times, however the company collecting present payments already has to notify the borrower at least fifteen days in advance of the change. The new Servicer has to notify the borrower within fifteen days of the tranfer. RESPA also says that no late fee may be charged for sixty days after the transfer if the borrower timely remits the payment to the wrong servicer.

    Just like a Senator beating a dead dog.

  12. MtgTech says

    Write your Senators and Banking Cmte members...

    Assuming you want to use a dwelling as security, here are a few other heinous consequences of this bill:

    1. Because “dwelling” is not defined and people have been known to dwell in them, points 2-6 below could apply to any loan you want to make that is secured by a:
    • Self-contained recreational vehicle or camper, or
    • Commercial building or store with a kitchen(ette) and bathing and sleeping areas.

    Note: It doesn’t matter if the dwelling/property is vacant, you live in it, rent it out, or use it for your business.

    2. To lend money to your child, say to help with your grandchild’s education, you would have to “be qualified and, when required, registered and licensed as a mortgage originator in accordance with applicable State or Federal law, including the Secure and Fair Enforcement for Mortgage Licensing Act of 2008.”

    3. If you need help with medical expenses, mortgage payments, or want to buy a home, you won’t be able to borrower from family or friends.

    4. If you have family members or friends who need help because they are unemployed, disabled, or want to purchase a home, you won’t be able to make them a loan.

    5. If you need to use your dwelling’s equity to pay bills or buy food during an income hardship (unemployment, illness, death of a spouse), you must apply for a loan with a regulated lender. This lender will be required to deny your loan request, if the government’s ‘to-be-established’ formula says you can’t afford repayment with your reduced income. Effectively, the equity in your residential properties will be locked away with no way to access it in an emergency.

    6. You can only finance the sale of 1 owned dwelling in any 3-year period. Any additional non-cash sale would have to be financed by a regulated lender. If your property doesn’t meet standards established by the lending industry (as is the case for many homes in rural America), the property would be unsaleable during that 3-year period.

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