Something doesn't feel right about the anti-predatory lending rules that just went into effect. The controversial state regulation changes mortgage lending rules in 10 ZIP codes on Chicago's Southwest Side to require that prospective buyers using mortgage brokers get financial counseling if their credit scores fall below 620. Sounds like a good idea, right?
After all, there's no requirement that the buyer actually takes the advice, and he or she can go ahead and purchase the house using a subprime lender peddling a high interest rate.
But working-class home buyers have enough to deal with. They shouldn't have to unravel more red tape.
Credit counselors would probably hope a high-risk buyer returns to his or her apartment mortified by the bottom-line cost of paying for a house over a period of 30 years. They are banking on that buyer to flee, leaving behind a trail of unsigned loan documents.
Maybe that will happen in a few cases. But I wouldn't count on it happening in most of them.
As long as there are mortgage brokers who are legally able to loan money to people with poor credit, people with poor credit are going to take it. They'll worry about what could happen down the road. That's their right.
No one thinks they are going to end up divorced and responsible for paying the mortgage all by themselves. People don't plan on getting sick or on losing their jobs.
More important, why should buyers looking for homes in those 10 ZIP codes be treated any differently than people who are looking for homes elsewhere?
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