Bad for Consumers: The Mortgage Improvement & Regulation ACT of 2009 (MIRA)

Just when you thought that nothing more could be done to add to the confusion, noise, and attacks on the independent mortgage lender/brokers along comes the Mortgage Bankers Association offering of draft legislation veiled in the promise of national standards to protect consumers. Unfortunately, it appears that the real purpose is the MBA’s continuing effort to support additional controls on the independent mortgage lenders and mortgage brokers and hold them to a different set of standards than the MBA’s primary constituents – the federal depositories.

The proposed legislation, The Mortgage Improvement and Regulation Act of 2009 actually offers tremendous opportunity for consumer and industry confusion in spite of its “mom and apple pie” objective to create national standards.

This legislation, if enacted, references and brings back many of the negative provisions of HR-3915, it adds conflicting definitions for things such as qualified mortgage and high interest loans, and it generally promotes the control of independent mortgage entities in the name of consumer protection.

In its 20+ pages:

  • Yield spread is once again attacked.
  • Mortgage brokers will have to prove net worth of $150,000 & have a bond of $75,000
  • Four (count’em – 4) new agencies are formed.
  • Federal depositories are not included in the regulation.
  • It appropriates $32,000,000 for Department of Justice employees and the Interagency Fraud Task Force
  • Offers additional changes to RESPA, TILA and the SAFE Act (Before these acts have even been implemented).

On a positive note it does suggest that the new agencies coordinate RESPA, TIL and the GFE and HUD-1. But, even an objective as laudable as taking a fresh coordinated approach can’t be justified in the context of all of the negative implications of the rest of the proposed changes.

Between 2008 and 2009, at the national and state level the mortgage industry has been the subject of possibly more legislative and regulatory scrutiny and action than any other industry in recent history. It seems that before one new piece of law or regulation can even be implemented; new, modified and often conflicting alternatives are proposed. MIRA is simply another in this line of never-ending assaults on a segment of the industry that has been blamed beyond reason for some of the problems being experienced by thousands of people.

There is one thing for sure; if the pace of such “consumer-protection” continues, consumers and tens of thousands of independent businesses will suffer the consequences. Someone needs to fight back. Will it be you?

Stay tuned for continuing information on this, HR-1728 and other activities such as the HVCC.

Reprinted with permission from Impact Mortgage Management & Advisory Group