Tuesday, June 12, 2007

The 411 on the 911

Oh my, do the Feds really get it?! Although this article at money.cnn defines sub-prime as lending only to those with poor credit, it does validate what those against Oregon's Senate Bill 965 have been touting: that over regulation will limit the loan programs available to consumers.
Let's clarify "sub-prime" or "non-prime" if you will. The market emerged mainly due to the Community Reinvestment Act of 1977 which states that institutions must be able to offer loans that help those within its own community. Yes, sub-prime loans are made available to those with poor credit histories, but it also includes those who might be self-employed, have lower incomes, or mortgage lates. Granted "prime" lenders have "non-conforming" or "alt-A" programs available, but their pricing is not always as competitive. Wiki: Subprime
As the market tightens due to the increase of defaults, the lenders whose guidelines may have been more loose than others are finding themselves in trouble if not shut down. The market is correcting itself, SB 965 is not necessary to protect Oregon consumers. Consumers themselves need to become better educated and all "loan originators" need to be held to the same standards. The proposal has been made to create a task force to draft a better law which does both, however it appears that a recommendation has been made to pass SB 965. There may be some additional amendments that I have yet to read over. I have not heard when the bill is back on the agenda but you can keep checking its status here on the webagenda.