Sub-Prime Mortgage Legislation and Regulatory Environment in 2004 Presented by: James Nedved June...
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Transcript of Sub-Prime Mortgage Legislation and Regulatory Environment in 2004 Presented by: James Nedved June...
Sub-Prime Mortgage Legislation and Regulatory
Environment in 2004
Presented by:James NedvedJune 17, 2004
Sub-Prime Historical Overview
• Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA)
• Home Ownership and Equity Protection Act of 1994 (HOEPA)
• Recent State Laws ExamplesNorth Carolina – 1999Georgia – 2002
• Office of Comptroller of the Currency – 2004
Macroeconomic Implications
• 11% of GDP is Real Estate Financing
• 2003 Total Mortgage Originations were $4.6 Trillion
• 2004 Estimates are $2.6 Trillion
• Sub-Prime lending increased 160% in total origination volume from 1994 to 1999 (and still increasing today)
Sub-Prime Predatory Lending Practices
• Section “32” Fee Structures of HOEPA
• North Carolina changes in 1999
Subsequent Origination Volume Implications – 43% Change **
• OCC preempting 2002 Georgia Law
• HUD – Treasury Joint Executive Summary
Predatory Lending Signals
• Property “Flipping”• Single Premium Credit Life Insurance• Lending without Income Verification• Fraud• Third Party Violations• Pre-Payment Penalties• Balloon Mortgage Amortization Schedules• Credit Reporting Misinformation• Mandatory Arbitration
Sub-Prime Mortgage Recommendations to Curb Predatory Lending Actions
• National Pre-Payment Penalty Limits
• Maximum Origination Points and Fee Structure
• Mandatory High School Mortgage and Budgeting Curriculum
Final Comments
• Evolution of Sub-Prime Lending since I started my career in the industry in 1995
• Personal Future Outlook
Questions or Comments