Judge Temporarily Delays Start Of Mortgage Law
RENEE MONTAGNE, host:
Mortgage brokers have been given a reprieve. Late last night a judge granted a stay, basically postponing a new law that was to take effect today banning brokers from charging higher interest rates on home loans and making commissions that way.
Scott Graf of member station WFAE in Charlotte has more.
SCOTT GRAF: The idea of the law is to prevent the predatory lending that sometimes took place during the housing boom a few years ago. Specifically, the changes aimed to do away with a lender getting paid a commission based on the terms of a loan. Right now lenders can add to their commission by signing up borrowers at higher interest rates than the homebuyer otherwise could have received.
Al Ripley is with the North Carolina Justice Center.
Mr. AL RIPLEY (North Carolina Justice Center): You had many homeowners who had good enough credit to get a good 30-year fixed mortgage but were instead steered into very harmful adjustable-rate mortgages that were simply unaffordable.
GRAF: Under the new rules from the Federal Reserve, loan officers would get commissions based only on the size of a loan. The mortgage industry, though, says the proposal goes too far.
Keith Luedeman owns Charlotte-based GoodMortgage.com. He says the changes will hurt those who can only afford small mortgages and those who don't have much savings.
Mr. KEITH LUEDEMAN (GoodMortgage.com): The fact of the matter is that extra money through a higher rate doesn't always go to pay the loan officer. Sometimes it can be used to benefit the customer by paying part of their closing costs.
GRAF: Two mortgage industry groups have been battling in court to block the changes. A hearing on their concerns is now scheduled for next Tuesday.
For NPR News, I'm Scott Graf in Charlotte.
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