Mortgage Market Armageddon
Minnesota and other states are enacting punitive laws regarding mortgages and mortgage brokers. These laws are reducing certain mortgage product availability. This in turn is actually increasing the housing downturn by reducing the number of available home buyers and thereby accelerating the number of foreclosures. In addition, Federal laws trump State laws. Federally chartered lenders-ie big banks-are able to avoid compling with onerous new state laws. A two tier system creates an uneven playing field and reduces a consumer's choices and limits options.
(PRWEB) August 10, 2007 -- Lenders are closing their doors left and right. Over 100 national wholesale lenders have gone out of business since the first of the year. Foreclosures are the topic de jour. What's happening out there? Jim Cramer from CNBC's Mad Money recently had a rather emotional assessment on national TV just days ago. You can search for it on the internet. Is somebody at fault? Why is this happening? What are the repercussions?
Minnesota mortgage broker Venture Development Inc has an opinion based on over 12 years of successfully brokering loans. Patti Mazzara, Vice President of Venture Development (http://www.ventureloanapp.com) states "The mortgage market is in trouble. There are many reasons why we are in the current crisis situation that presents itself today. While many would like to blame the banks and brokers for the crisis, they are failing to focus on the borrower and their responsibility in the loan process. Nobody put a gun to the head of the borrowers as they possibly intentionally overstated income on certain loan products.
Unfortunately, over zealous legislation by various states has sought to solve the problem by creating laws that remove certain types of financing. The states are trying to legislate the free market system of supply and demand. If certain loan products have higher default rate, the investors will eventually not buy them. If no one will buy the loan, it won't be created. Instead, the State of Minnesota as with other states has removed the ability of borrowers to get "No Documentation" and "Low Documentation" loans." There is a book call "1984" by George Orwell where "big brother" decides what is allowed by society. The new State of Minnesota mandated mortgage legislation reminds me of this. John Stossel produced a DVD called The Blame Game: Are We a Country of Victims that I would highly recommend the legislature view before making any more laws that will hurt consumers rather than help.
John Mazzara, President of Venture Development and real estate broker associate with RE/MAX Associates Plus (http://www.selling.mn) comments "There are over 34K homes available for sale within the Twin Cities real estate market. Any legislation that removes a potential buyer from the market because they can no longer obtain financing due to state legislation is WRONG. The real estate market is dependent on first time buyers starting the "domino" effect in the housing market. Many first time buyers have no credit, limited credit, or blemished credit. These first time buyers now have limited access to mortgage products because of the new legislation that affects subprime lending. Subprime is not predatory lending. Yet it is often assumed incorrectly that the two must go hand in hand. Predatory lending is wrong. It is illegal and always has been. Subprime fills the niche for borrowers who are unable to get a traditional "A Paper" loan because of their income, job, credit or all of the above. Some areas where the foreclosures have been the worst may not be attractive to the most credit worthy buyers. By removing mortgage products from the market that could have served borrowers more likely to purchase within those areas, you are actually making the foreclosure situation worse."
What's the solution? Let the free markets work like free markets. Have fairness among mortgage laws that apply to all lenders. Did you know that federally chartered banks are exempt from state mortgage laws? That means the laws don't apply to everyone producing loans within a state. Is the consumer benefiting from a two tier system? How can consumers benefit when they are now given less choice and less competition? Who really benefits from these new laws? Who have you heard the least amount of criticism or complaints from? This current situation is wrong.
About Venture Development Inc
Venture Development is Minnesota's Premier Mortgage Broker. They are based in Edina, Minnesota and provide a wide range of mortgage products for purchase, refinance, investment property, and commercial loans. They have been established since 1995. John Mazzara is President and Patti Mazzara is Vice President. http://www.ventureloanapp.com John Mazzara-952-929-2577 or Patti Mazzara-952-285-4319
John Mazzara is a broker associate with RE/MAX Associates Plus, Edina, Minnesota
John has been successfully selling homes since 1986. He has achieved Platinum club and Hall of Fame status within RE/MAX. John was voted as a Twin Cities Super Agent by MplsStpaul Magazine. http://www.selling.mn John Mazzara-952-929-2577 612-386-7027
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