Posted: Tue Dec 26, 2006 10:30 pm Post subject: Poor credit borrowers to undergo counseling at Chicago
The state government in Chicago has framed a law which requires homebuyers with poor credit in 10 zip codes on the southern side to go through counseling prior to closing a home.
I don't think this is a good move as far as low income people and poor credit borrowers are concerned. Now that the law has already come into affect, people having low credit scores and willing to buy a home may drop the idea because of counseling sessions and fees involved.
What do you people suggest? This is the time homeowners and borrowers should get together and stand against such laws so that the state rescinds them.
I have heard that the law has been enforced so that the industry can get rid of predatory lending. That's why it will be applicable in states where the percentage of foreclosure is also high.
Posted: Wed Dec 27, 2006 4:44 am Post subject: RE: new law requires credit counseling to apply for loans
But Anne, when a borrower starts working with a broker in the state which follows the new law, his credit information and loan requirements are entered into a database available with the state. And, generally, borrowers don't want to send their financial data to the state.
The main reason this law was enacted was to prevent the abuse of Adjustable Rate Mortgages.
For me it is a good move. As Sara said some people will not agree to make their information public. But it is also true that many people are unaware of the various clauses in a mortgage and very often lenders do not explain all the information correctly also. Such counseling will help borrowers avoid falling in to situation wherefrom only foreclosure is the way out.
Sounds good David. let's hope the new law will help borrowers save their homes and avoid foreclosure. _________________ Procrastination is the enemy of your financial sucess
The ten zip codes House Bill 4050 is focusing on are 60620, 60621, 60623, 60628, 60629, 60632, 60636, 60638, 60643 and 60652. The intentions of the Illinois General Assembly are good but it has also raised some questions, like;
Why the law has fully exempted federally chartered banks?
Also HB 4050 will no doubt help to identify lenders who are making such kind of bad loans, but it also a fact that this law does nothing which would penalize lenders making such bad loans.
It also does not prohibit finalization of any such questionable loan transaction between a borrower and the bad lender after the borrower completes a counseling session.
These reasons can cause some kind of backlash by participating industry members if not solved in time.
helping_user
