Mortgage Crisis Daily

This is an example of consumer protection from the federal government at its finest. The Federal Communications Commission recommenced its battle against provocative television shows late Friday, proposing a $1.43 million fine against the ABC and its affiliates for a February 2003 episode of “NYPD Blue.” Finally 5 years after the episode aired, 2 years after the final season of NYPD Blue, the feds decide to protect us.

It makes you wonder how long it will take for the federal government to enforce borrower protection regulations already in place. The regulators are talking about creating new expanded regulations. The new regulations will have clearer, stronger language in an attempt to put some teeth in them. The problem is, the regulations will go through the blender, and will be no closer to being enforced than the old regulations.

Truth in Lending, Homeowners Equity Protection Acts, were never seriously or consistently enforced to aid the borrowers. I’ve received reports from people that refinanced mortgages. Too many of these people describe refinancing from a fixed rate to a variable rate with prepayment penalties. Some of these transactions involved getting a new second mortgage to pay the fees for the new first. It is sleazy and the result of poor enforcement of consumer protection.

Usually the consumer gained no real benefit. Under indifferent scrutiny, the new mortgage met the criteria under HOEPA. The fees were the maximum allowed by law and because of teaser rates the first 6 months of payments slightly lower. The costs financed into a first mortgage exceeded the value of the house securing it and would not meet the criteria for HOEPA. The fees and mortgage amount were distributed between 2 loans and concealed from regulators and poorly understood by borrowers.

Naturally, the fed will move quickly on this and other matters. Our grandchildren will be reading the headlines 20 years from now. By then it will be ancient history. Lenders, brokers, investment companies, bond raters and insurers, and regulators will forget it ever happened.

Hi, I'm Jen and I'm here to help. Submit your complaint here or get help here

This article, Federal Protection Move at Speed of Snail, is just one of our articles from our Mortgage Crisis Daily

The Subprime Mortgage Crisis Before, During, and After

Mortgage Crisis Daily monitors banking problems and customer complaints and has done so since 1999. Writers hold no stock positions. Some material is used under the fair use copyright act.

We use Thomson Reuters News Service Calais in all production material but are not associated with Thomson Reuters, banks, or financial institutions in any way.