Fresh off the heels of HR3915, the Bill that at one time threatened to do away with YSP and is currently awaiting Senate review, comes the next round of legislation. California Assemblyman Ted Lieu is expected to introduce AB1830 shortly, a bill which is set to target California and more specifically, stated loans, option arms, sub-prime and non-traditional mortgages, and yes, once again, YSP.
We’ve always been trendsetters in California, so if this bill passes in its present form and your state files suit, rendering the general public virtually unable to obtain credit and with substantilly higher costs involved, thank us. I’m still waiting for legislation regarding the silent killers, knives and diving boards. I’ve heard that half a million people a year end up in the ER after cutting themselves while holding a bagel and cutting it at the same time. I learned firsthand, in college working as a cook, the dangers of cutting a bagel while holding it.
According to HousingWire.com (they broke the story when they received an anonymous copy of the bill): In addition to outlawing option ARM mortgages altogether, the bill would essentially eliminate stated-income lending for high-cost, subprime and non-traditional mortgages - the bill’s language says stated income applications must be “verified,” which really means they aren’t stated at all. The bill would also outlaw YSP as a method of compensation for high-cost, subprime and non-traditional mortgages.
The use of YSP in all other mortgages (including, ostensibly, prime originations) would be limited by establishing a rate ceiling of 200 basis points above par, and only permitting the use of YSP whenever it is the broker’s sole form of compensation on a loan.
AB1830 promises to be yet another misguided overreaction by politicians with a limited understanding of the problems at hand. In addition to simply being bad legislation, AB1830 shows the inability politicians to understand the negative consequences such legislation poses for the public at large. There is a fine line between protecting the public and taking away useful financing tools such as YSP and various “high risk” products that can be extremely useful tools for the wealthiest and poorest borrowers, even if there is a potential for abuse as there is with many useful tools, in and out of the kitchen.
Author: Trace Richardson can help with your No Closing Cost Refinance at TraceCapital.com.
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1 response so far ↓
1 Gina Gardner // Jan 28, 2008 at 11:42 am
This is what happens when we put the lunatics in charge of the asylum…I think I’ll send Congress a crate of bagels and ginsus–maybe they’ll put themselves out of commission
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