Area mortgage lenders are shrugging their shoulders at consumer-protection measures announced last month by Fannie Mae, calling the "Mortgage Consumer's Bill of Rights" proposed by the nation's largest supplier of mortgage funds "nothing new."
"They're making statements, and they are really nice statements, but that's all they are. What is the point of calling for a bill of rights if the laws are already in place that are supposed to guarantee these things?" said Joseph Brown Jr., owner of Premier Equity Mortgage in Baltimore and president of the Maryland Association of Mortgage Brokers.
Fannie Mae's chairman and chief executive officer, Franklin D. Raines, announced the Bill of Rights at the National Association of Home Builders' annual convention in Dallas, and called for the mortgage industry to advocate five basic rights that consumers should have in the lending process.
Raines said consumers should have the right to access mortgage credit, know the true cost of a mortgage, obtain the lowest-cost mortgage for which they qualify, be free of regulatory burden and know what is behind a lender's mortgage decision.
Fannie Mae buys mortgages issued by banks, thrift institutions and other mortgage lenders, and then packages the loans and sells them to investors as mortgage-backed securities. When Fannie Mae buys mortgages from lenders, the lenders are provided with the cash needed to issue new mortgages. Consequently, lenders must follow underwriting guidelines issued by Fannie Mae.
Big financial decision
"Taxi passengers, HMO members and consumers across the board are getting their bill of rights. Why shouldn't mortgage applicants, who are making the biggest financial decision of their lives," Raines said in his speech.
In announcing the measure, Raines said the "Bill of Rights" would strengthen homebuilders and mortgage lenders as well as consumers, but the announcement met with distrust from some in Baltimore's mortgage community.
"I would like to know what Fannie Mae is trying to do here -- what is their true purpose? The Bill of Rights certainly does not introduce anything revolutionary or even anything new," Brown said.
Al Ingraham, vice president of MNC Mortgage Corp. in Baltimore and vice president of the Greater Baltimore Board of Realtors, said Fannie Mae's announcement simply detailed what is already going on in the mortgage industry.
