Mr. Miller,
If you care to, I wish to converse with you concerning your article opinions on predatory lending. I am going to assume for the time being that your intentions are honorable, and that you really wish to help the consumer. If that is the case then I feel the result of your proposals would be the opposite of your intent. I am a non-conforming mortgage broker with 11 years of experience in this industry. I have watched legislators, consumer advocates, and regulators repeatedly fumble the ball on this issue. Each year this situation becomes increasingly frustrating. I feel your editorial opinions are in the same camp. Born of emotion and severe oversimplification.
If you wish to find a villain in this story,please cast the light where it should be placed. Upon the very law itself. HOEPA is bad law. I opposed it when it was proposed by Joseph Kennedy and Donald Riegle, and I oppose it now. It destroyed a marketplace that was becoming increasingly competative at the very time that HOEPA became law. HOEPA effectively drove 85% of the previous competitors (myself included) out of the marketplace, and left it to a small number of huge, consumer finance oriented participants. As competition receded, prices rose. Simple, free market econonmic theory in action. This mind you, at the same time that non-HOEPA, subprime finance was dropping preciptously in cost to the consumer. Loans with similar credit risk characteristics that we had to broker out at a 15% rate in 1993, we could close for 10% by 1997. Pricing for HOEPA credit quality loans are virtually the same price now as they were in 1993. Fancy that, even though the lenders cost of borrowing has fallen sharply since 1993, the cost to consumers has not changed. This I directly attribute to HOEPA.
Now, it seems to be the intent of various legislators, regulators, and self-professed "consumer advocates" to expand upon the very law that brought about the expansion of this problem in the first place. Soon, their prescribed medicine will be far worse than the affliction.
I have watched this market develop from its infancy. I have watched while admittedly, certain participants in this lending industry have grown fat off of sucking large amounts of equity out of the homes of a trusting consumer base. As I have chosen to refrain from that practice, I have denied my family an increased standard of living on ethical grounds. I share the frustration of yourself and the assailants of "predatory" lending. But I must say, the path this group has chosen to combat this scourge is ill-fated, and potentially ruinous to the very group you wish to protect. All the proposals of this ilk will do is fatten the very rats you wish to eliminate.