Iowa Foreclosure Legislation Aims to Pin Predatory Mortgage Lending Down for the Count!
While the state of Iowa is known for its excellent tradition of high school and collegiate wrestling, it may become renowned for such similar toughness when it comes to grappling predatory mortgage lending and sub-prime loans.
Attorney General Tom Miller has introduced various pieces of legislation which would tackle rising Iowa foreclosure rates and instances of predatory mortgage lending. Miller asked state lawmakers last week to consider his various pieces of Iowa foreclosure legislation outlawing questionable lending practices.
Concerned by rising Iowa foreclosure rates, Miller said that it was time to "reign in" on those people who are abusing consumers. Iowa foreclosures were up 64 percent in 2006 as compared to 2005 foreclosure totals in the state.
Miller added that "predatory lending exploits consumers" and criticized sub-prime loans, which often allow people with less-than-stellar credit histories, limited income and other red-flags to get a mortgage at low interest rates which shoot up in the future.
What Would Miller's Iowa Predatory Mortgage Lending Legislation Tackle?
Miller said that this Iowa foreclosure legislation would tackle several serious problems currently affecting many homeowners in the Hawkeye State, including:
. Risky loan products offering low "teaser" rates for a short period of time. Miller said that lenders eager to make a loan may approve mortgages solely based on the borrower's ability to pay the low interest rate rather than considering whether that borrower will be able to make payments in the future when interest rates rise.
. Unfair lending practices like misrepresenting a consumer's credit rating or status and fabricating their income. Miller cited a laundry list of other unfair lending practices which also need to be addressed, including "flipping consumers" (refinancing their loan without a net tangible benefit), advertising loan terms that are not available to other applicants, promising to refinance at a later date on better terms (unless done in writing), and making loans without checking into the borrower's ability to repay them.
. False "stated-income" loans (aka "liar loans). Miller said that these loans get borrowers to exaggerate their incomes and are then qualified without verifying what borrowers really earn. In turn, Miller said that borrowers are left "in over their heads" with monthly mortgage payments that they can't pay, often forcing them into foreclosure.
. Mortgage broker abuses like selling inappropriate and unaffordable loans which benefit the lender and put the borrower at a high risk.
. Mortgage fraud, including forged signatures, re-dated documents and altered bank statements.
How Would Miller's Iowa Predatory Mortgage Lending Legislation Combat Such Problems?
In addition to fighting the unfair lending practices outlined above, Miller's legislation would aim to improve standards for mortgage bankers and brokers by requiring them to safeguard and account for the borrower's money, follow borrower instructions and disclose facts that affect the borrower's best interests. Mortgage brokers would also have to make concerted efforts to shop for a loan that is advantageous for the borrower within reason.
This Iowa predatory mortgage lending legislation would also limit discount points, establish a mortgage lending fraud prosecution fund and provide specific remedies for violations. As examples, Miller himself would enforce violations of these statutes under the Consumer Fraud Act while the Iowa Division of Banking would also use its regulatory authority to go after violations. Read in more detail about this Iowa predatory mortgage lending legislation and how it would tackle these problems.
Iowa Foreclosure Levels and Instances of Predatory Mortgage Lending Are Not Alone!
Miller detailed how the mortgage lending market has undergone a great amount of change in the last 10 years. While borrowers used to have the choice of a fixed-rate loan or an adjustable-rate loan, there are many more types of home loan products on the market these days. With more opportunity comes more chances for fraud as well, a fact that Miller pointed out.
With that said, Iowa is not the only state to experiences more foreclosures and see more instances of predatory mortgage lending over the last year. Fort Lauderdale, Detroit, Dallas-Fort Worth, Indianapolis, Atlanta and Las Vegas are just some examples of cities where foreclosure rates have recently skyrocketed.
Facing Iowa Foreclosure? Got Predatory Mortgage Lending Concerns?
If you're worried about Iowa foreclosure, you may not be alone and should speak with a local attorney as soon as possible. An experienced attorney in your area can evaluate your financial situation and help you determine if refinancing, debt workout plans, Chapter 13 bankruptcy or other foreclosure options may help you keep your home.