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Message to feds: Protect, but don’t overregulate

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The Obama administration is gathering public opinion on how to improve the housing finance system, including the operations of Fannie Mae and Freddie Mac and the federal government’s role in the system.

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The Treasury Department released questions seeking comment from the public, and Inman News asked real estate professionals to weigh in on some of these questions. Responses to one of those questions follows, and other questions are addressed in separate articles.

What is the best way for the housing finance system to help ensure consumers are protected from unfair, abusive or deceptive practices?

James Crumbaugh III
Allison James Estates and Homes
Lake Suzy, Fla.

I do agree that we need consumer protections. I used to lecture my Realtors at my weekly sales meeting about the vultures in the lending industry taking advantage of borrowers who didn’t understand what they were signing.

Many times I would have a Realtor come to me because their customer was turned down for a loan with a solid and known lender, and the next thing I would hear is that they were going with a mortgage broker I had never heard of.

I believe that all loans should be locked in at least 30 days prior to closing and that it is fully disclosed to the borrower what their payments will be once the loan converts.

Judson Voss
Roxx Productions LLC
Mooresville, N.C.

I am wary of government-sponsored consumer-protection laws. My experience is that the government tends to create blanket laws that outlaw certain practices that are legitimate just because there are illegitimate operators in the market. 

As an example, many states do not allow individuals to perform short-sale negotiations because of some fraudulent operators. Instead of outlawing the practice or only allowing Realtors to perform the task, why not create certifications and licensing to protect consumers?

Pamela Dela Cruz
Pamela Dela Cruz & Associates LLC
Walnut Creek, Calif.

In regards to the loan-modification and short-sale processes, the current unfair practice right now practiced by lenders is that they (don’t appear to be helping) homeowners who are current with mortgage payments. In fact, they (tend) not to assist owners unless they are 60 days late. However, bank representatives (don’t seem to be revealing) this to the borrower. It’s just a dirty little secret that Realtors and brokers know about. 

The effect is that the homeowner is even in more at risk of losing their home. Once you receive a notice of default, you have 90 days before the trustee sale. If your house is on the market (and) the bank (does not approve) an offer at hand, the owner will lose the home if there is no trustee sale extension. This is the most deceptive (part) of the whole process.  …CONTINUED