Cook County Get Ready: The Return of House Bill 4050

Published On 2007-03-27
Cook County Get Ready: The Return of House Bill 4050

Just when Cook County residents thought it was safe to go back in the Mortgage waters, HB 4050, the predatory lending bill has returned, and it’s even worse than before.

Chicago residents will remember HB 4050 as the reactionary piece of legislation that required homeowners with poor credit in certain 'at risk' Chicago zip codes to attend credit counseling before obtaining a loan from mortgage lenders. Well that didn’t have the intended consequences; instead it worsened the housing market in the Chicago zip codes to the tune of 50% drops in home sales. So what is the legislature to do with a bill that was such a resounding failure….extend it to all of Cook County of course!

The new and improved HB 4050 recommends for credit counseling all borrowers in Cook County who are either first time home buyers or refinancing their primary residence and is obtaining a loan which has any of the following.

* A pre-payment penalty

* Is an interest-only loan

* 80/20 loans

* Is a stated income loan

* Has negative amortization

* ARM's

* Total points and fees exceed 5% of the loan

To read the press release go to:

Anyone who meets the criteria of HB 4050 will be entered into the HB 4050 Pilot Program database and recommended to attend credit counseling before receiving the loan. This brings up a few interesting questions. Firstly, does anyone know what credit counseling entails and if it actually worksnull Secondly, does anyone want to see an even bigger State government which can’t even manage to fund our schools properlynull

Here is a suggestion; instead of wasting all that money monitoring a brand new program which won’t do anything but create more bureaucracy, why not instead spend the money on personal finance courses for public school students starting at age10 teaching financial responsibility.

I am not saying that government should not work to end mortgage fraud, however, he mortgage markets work on the laws of economics, seek profits for hareholders and will not continue to fund high risk loans which end up as non-performing assets i.e. foreclosures….only a public company could survive hile continually losing money. Eliminate fraud not choice.