Lowell Deeds

The latest on real estate recordings and new technology from the Middlesex North Registry of Deeds in Lowell

November 9, 2007

New Regs for Mortgage Brokers

by @ 10:28 am. Filed under Real Estate

Next Thursday a new set of regulations governing mortgage lenders and brokers will go into effect. Promulgated by the Attorney General, these new rules are intended to “stop deceptive mortgage practices.” Specifically, they prohibit mortgage brokers from making a loan if they have a reasonable belief that the borrower will be unable to repay the loan; the limit “no-document” loans, they prohibit brokers from arranging loans that “are not in the borrower’s best interest” and they prohibit mortgage lenders from steering borrowers to loan products if the borrower could afford a less expensive product. While this all seems designed to prevent another iteration of the subprime meltdown we’ve just passed through, many reputable mortgage brokers see this as fatal to their way of doing business. I haven’t quite figured out whether they are misreading or overreacting to the regulations, or whether their concerns are legitimate. If they are legitimate and the local, retail level mortgage broker has to close up shop and leave it to banks and other institutional lenders to originate such loans, it will be one more drag on the housing market.

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