Independent Lenders At Risk of Big Bank Monopoly

The deadline for the Treasury's program of purchasing mortgage backed securities is March 31 and is causing many lenders to reach even higher levels of frustration with the housing market. Mortgage lenders feel the Department of Housing and Urban Development's (HUD) new Real Estate Settlement Procedures Act (RESPA) guidelines are only going to backfire and cause more problems to the already ailing housing market.

The market crash began because people were given loans they couldn't afford. When those masses of new homeowners were unable to pay their mortgages, the mortgages went underwater and were costing more than the home was valued. Now everyone is at risk, lenders can't give good loans and borrowers can't qualify. The new RESPA guidelines, according to the nation's lenders, are going to make this matter worse even though it intends to improve it.

Alan Rosenbaum, president of Guardhill Financial told Bankrate.com that the new guidelines and regulations are just another way of pushing out the independent mortgage lenders and creating a monopoly of the larger banks. "Intelligent, prudent lending by mortgage specialists is the simple solution." Instead of our local politicians looking for blame on why all of this happened, he feels they need to look towards more solutions.

Michigan state representative, Sharon Tyle, is doing the opposite, or so it seems, and conducted an open forum for Detroit residents to learn how to protest their overtaxed homes. Since most homes, especially in the worst hit areas, are no longer worth their original values, then the taxes should decrease as well. If people are to make their mortgage payments then they can't spend all of their money paying overpriced property taxes.

"The consolidation of the mortgage industry has been a problem since the housing market began to crumble. According to MortgageStats.com, the four biggest lenders were responsible for more than 78 percent of mortgage origination dollars in the third quarter of last year. In the same period two years before, they had 67 percent of market share." (Bankrate.com)

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Source: Bankrate.com, HUD and RESPA

Written by Amy Munday