Time for an update.
Yesterday I told you that the home mortgage industry in Georgia was in a crisis. A bunch of do-good legislators, urged on by our then-governor Roy Barnes (a lawyer, who should have known better) passed a bill last year that was supposed to curb the abuses of so-called “predatory lenders.”
There were a few – very few – real estate lenders in Georgia who were seeking out the elderly and the stupid. They would loan them money at high rates and would sometimes end up taking the home in a foreclosure action. More often than not what was described as a “predatory loan” was a loan made to some deadbeat with pathetic credit. This is commonly what awaits those who abuse lenders and fail to pay their bills.
Yesterday you learned that mortgage lenders were pulling out of Georgia as a result of this law. Standard & Poor’s was refusing to rate mortgage-backed securities containing Georgia loans. Lenders were laying-off employees. Some were predicting a complete shut-down of Georgia’s mortgage lending industry
Here are some things I’ve learned since yesterday:
Some mortgage lenders are calling their largest builder clients and telling them that they aren’t in a position to make any loans right now, let alone quote interest rates. This is leading some builders to slow down their plans for further construction.
Home mortgage interest rates in Georgia are inching upward. Interest rates in some cases (when you can actually get a loan) are as much as one percent higher than they would be, save for the predatory lending act.
Isn’t this just sweet? Many Georgia lawmakers are referring to this crisis as an “unintended consequence.” Give me a break. It may be “unintended,” but it was damned sure foreseeable. Georgia mortgage bankers and real estate professionals told Roy Barnes and the bills chief backer, Senator Vincent Fort (Democrat, naturally) what was going to happen. And it happened. So don’t give me this “unintended consequences” nonsense.
This, my friends, is what happens when people with marginal intelligence and common sense are handed the immense power that goes with elective office.
So … what are these people saying today? Well, you heard Vincent Fort (history professor at Morris Brown College) on my show yesterday. He says that everybody is overreacting and must misreading his bill. It’s all a plot against the poor and the elderly. Today Senator Fort is saying that this is nothing but an industry attempt to “weaken or gut the bill.” It’s all “part of a campaign of disinformation orchestrated by the (mortgage) industry.
Vincent Fort has a problem here. He has his ego invested in this hideous legislation. He can’t bring himself to admit that he and his fellow legislators screwed up, and that their screw-up threatens to throw Georgia into economic crisis. Fort even challenged me to name the lenders who were pulling out. That challenge is met below.
Oh .. and now you should know that this has become a “Republican” thing. The Atlanta Journal-Constitution, which doesn’t have the sense to be embarrassed by its strong support of this legislation last year, is suggesting that this is all about Republicans trying to protect their mortgage company pals. A headline in this morning’s paper reads “Lenders pose new threat to lending law.” Isn’t that just incredible? S&P won’t rate Georgia loans anymore. Lenders are pulling out. The U.S. Office of Thrift Supervision views the Georgia predatory lending law as such a threat to lenders that it is exempting the institutions it regulates and controls from much of the law. And the Atlanta Journal-Constitution says that this is all the fault of the lenders? It’s the lenders who pose the threat to the law, and not the other way around? INCREDIBLE!
This morning the Atlanta
Journal-Constitution also reports “Supporters believe the state Senate, now
controlled by Republicans, will be a more receptive forum for the mortgage
industry than it was last year under Democratic control.” The writer didn’t
name any particular “supporters,” so, who knows? Anyway, see what we got from
last year’s Democratic Senate? A mortgage loan crisis.
The Lesson?
I’ve said it before. Vast
numbers of people who serve in local elected offices, and this includes state
general assemblies around the country, are functional fools. They have no
real understanding of the consequences of their actions. When votes are at
stake they won’t listen to the advice of experts. Getting votes and staying
in office is always number one … paying attention to the consequences of their
legislative efforts is somewhere down the list.
OK, Senator Fort, So
you want a list?
My thanks to Jeffery Dickerson from Dickerson Communications for this list of companies and organizations who have pulled out or are limiting the business they do in Georgia. Have a good read, Senator Fort … and maybe you can call and tell us how all of these companies, all of their lawyers, the Office of Thrift Supervision and many others are all “misreading” your law.
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