An Important Point Legislators Need To Remember

Matt Carter on Inman Blog writes about the survey that all of us California DOC lenders received a while ago asking about our non-traditional mortgage loans. He rightly asks the question "So uh…what exactly have you fellas been up to?" The CA DOC is not alone. Michigan recently sent out a notice the starting in 2007 all lenders need to track non-traditional mortgage products as well. I’m a sure there many states in the same boat.

The answer is in the post, however, in this critical statement; "The department, he says, has 25 examiners to supervise 4,800 lenders." That is what the "fellas" have been up to – their necks in paper work, annual reports, audits, complaints, etc. I hope that legislators take notice of this at both the state and federal levels.

I am of the opinion that except for a few changes, the existing mortgage laws about disclosure are adequate. I say that because if you’ve ever seen a set of closing documents you know a lot is being disclosed. It’s like drinking from a fire hose there is so much disclosure going on. We don’t need more forms. Easier to read forms, clearer, more explanatory forms? Sure, I’m all for consumer comprehension and clarity. More forms is NOT the answer.

The answer is simply more examiners, more enforcement of existing laws. Unfortunately our government isn’t really set up that way. Legislators would rather put their name on a new bill that provides new legislation – its a whole lot sexier than asking for a bump in the regulatory affairs portion of the budget. That is the problem. Instead of more laws, requiring more disclosure, why don’t we have more enforcement? More reviews of more lenders. Let the existing laws work. Improve existing laws where it makes sense (and there are a lot of places it makes sense) and fund the departments fully so that those laws can come to life and be effective.

Say no to more laws, say yes to good laws actually enacted.