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RE: For numerous other reasons this bill as originally drawn up is terrible please see

Link . This petition has over 115,977 opposed to this act along with responses as you requested.




Representative Peter King (R-NY 3rd)

8th-term Republican from New York.














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Letters To Leaders


All messages are published with permission of the sender. The general topic of this message is Housing:


Subject:
HR3915 Bad legislation

To:
Rep. Peter King

November 12, 2007

I am a 21 year veteran in the mortgage industry. I have been the Vice President of a lender and most recently for the past 7 years I have been a small mortgage broker. I do not have complaints against my company, and I have been reviewed by the banking department audit(s). I have lower deliquencies on my originations than most conforming lenders. Why does YSP prevent predatory loans? It does not. It eliminates small originators only. It does not prevent bad loans. It prevents brokers for being able to provide low cost loans only. YSP, Servicing Release and gain on sale premiums should be treated the same way. Most lenders just like brokers, have their loans locked or sold, or hedged for sale prior to closing. These premiums should be disclosed by all or by none. What's good for the goose should be good for the gander. Predatory loans have everything to do with underwiting standard, eithic, and oversight. Our sub-prime problems have roots in Federal Pre-emption, believe it or not. If the state chartered lender(s) where prohibited from pre-payment penalites, and Federal Chartered institutions had no restriction, then market forces drove volume to the best price... the lender which had the pre-payment penalty, thus the lender with no consumer protection issues, could grab market share. Portfolio appreciation with: Negative Ammortization, "payment option" arms and also "Subprime ARMS" had horrible resets which benefit only the holder / securitizer/ portfolio holder. Gross 6.99% margins and inadequate interim caps were trademark, and went hand in hand with poor judgement. The teaser rates that the unfair pricing policy had benefitted and subsequently spurred Ferderal Chartered Institutions into a frenzie.

Brokers which were the only group to disclose total fees, and income, still needed to sell their originations to the best execution. Where did gain on sale accounting, and mark to model, fit into the YSP and predatory lending?

Borrowers want seasoned veterans of the industry to provide advice, and safe products, but they also want the lowest possible cost as well. In a level playing field, poorly concieved products, which lack consumer protections are cast by the wayside. Pre-emption gave rise to unfair advantage, and an unlevel playing field. The lack of protections made sub-prime and option arms even more popular because the teaser rates had so much appeal. State licensed and chartered institutions had to follow the best price. In New York the state prohibits pre-payment penalties so to price any loan competitively, you had to do business with someone who had a federal charter. It was a license to print money.

Gain on sale / servicing premiums (servicing release premiums) /Yield Spread Premiums (which is more valuable with pre-payment penalties)
is just a pricing mechanism, not a quality mechanism. These pricing mechanisms must be equal for a healty market. Either we all disclose or we do not. It is not a quality mechanism.

HR3915 fails to provide a level playing field. It worsens it. HR3915 is not good legislation.

Please make sure not to pass HR3915.

Merrick , NY


Related Issue Alerts: • House Passes Bill Curbing Predatory Lending But Falls Short on Some Protections - CFED
• Ask for a strong bill to counter predatory mortgages - Consumer Action
• HUD Snubs Public! - Association for Homeowners Across America AHAA
• Your Support Needed for Housing to Survive Veto - Coalition on Homelessness and Housing in Ohio
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