Over the weekend I read another article about the steps the government is taking to reform mortgage services. I just shook my head thinking about all the tax dollars that are being spent on committees and research. You know how fast government works, right? Halfway through the article, it states that they are still years away from any type of reform. In my opinion, not only is the government again messing with the free economy, but they are taking power and the voice away from the consumer. When I say voice, I mean that most consumers think the government will make everything better and they should not demand transparent mortgage services NOW.

So I say, let’s derail this slow moving, tax funded, train!

…along with all of the reforms, really — could possibly cost consumers more for their mortgage, perhaps adding as much as a half a percentage point to their mortgage rates, said Cameron Findlay, chief economist for LendingTree.com. In addition, lenders who can’t afford to make the procedural changes might be forced out of business, which could effectively decrease competition, he added…

But, Findlay said, any extra costs would be worth it to restore faith in the system and protection for consumers. Also, it’s a drop in the bucket compared with what it’s costing to clean up the havoc created in the mortgage market and the entire economy when mortgage money was easy to get.
Source: MarketWatch

I say we can, and are, doing it now, for free and still maintaining the free economy.

Below are three points from the article that can be address now

1. Requiring transparency. Consumers would receive a simple, integrated federal mortgage disclosure that is “reasonable, clearly written and concise,” and be adequately presented with the risks and benefits of a mortgage product.
   
   First of all, we have this now, it’s called the good faith estimate. It sounds like they want to add more documents to it, that probably won’t be read by the consumer because they will be given in the already large folder-o-docs that you get with any mortgage. You can make it as simple to read as possible, but when accompanied by dozens of other documents it just become another “skim over” item.Doesn’t better, more trustworthy, business win… Instead of waiting for the government to give the people the “thumbs up” and say it is now safe to borrow and trust mortgage brokers again, the consumer should be educated and shown that there are transparent mortgage services out there. Consumer demand outweighs government intervention any day!
2. Promoting simplicity. Borrowers would first be offered “plain vanilla” mortgages with terms that are straightforward. They can obtain more complex mortgages, but those vanilla loans will be presented as a first choice.
   
   I think what they are talking about here is when a consumer cannot afford a mortgage of any type, so the mortgage broker gets creative, skips the 30 year fixed products and goes right to the adjustable mortgages. Again, it comes down to transparency of mortgage broker, and many Realtors, that often separate themselves from the mortgage side of things, need to stand up and protect their clients too. Real estate transparency is an umbrella, covering all aspects of the transaction.
   
   
3. Demanding fairness. Mortgage brokers would be required to determine whether the mortgage they’re selling to a borrower is affordable, and prepayment penalties would be banned or restricted. Hidden fees that compensate a broker for selling a higher cost loan would be banned.
   
   This is where it starts to play with our free economy. Is that gas you’re buying affordable? Is that dentist bill affordable? is your paycheck big enough… This is a slippery slope when the government starts making vendors question whether the product they sell is affordable. Maybe the government should just jump in like health care and create a government mortgage loan service and compete with the big mortgage companies? That would solve everything!

If you think that we can change the mortgage industry before the government can, please become a fan of the Transparent Mortgage Network on Facebook. Let’s build a voice and create a better mortgage system.