Say hello to the next financial crisis, brought to you courtesy of the dumbest new bill of the week: H.R. 5148: Access to Affordable Mortgages Act.
Ordinarily whenever an individual wants to borrow money for a mortgage, the bank conducts due diligence… both on the borrower as well as the property.
It’s in the banks’ interest (as well as the banks’ depositors) to ensure that the property is at least worth as much as the amount being borrowed. Duh.
Congress doesn’t agree. Apparently when banks conduct property appraisals, that seems to unfairly discriminate against some segment of the population trying to buy crap properties.
And we certainly can’t have that going on in the Land of the Free.
So with HR 5148, Congress aims to exempt certain ‘higher-risk mortgages’ from property appraisal requirements.
Curiously, this legislation reverses several provisions in the 1968 ‘Truth in Lending Act’.
It’s as if Congress is now anti- ‘Truth in Lending’ and pro- ‘whatever the hell gets the money on the street’.
And of course, all of this comes at a time when mortgage rates are still near their all-time lows.
You can borrow money to buy a home today at just 4%. That’s less than half the long-term average of 8.5%, and a fraction of the 16%+ people were stuck paying 30 years ago.
Isn’t paying 4% affordable enough? Nope. Not according to Congress.
Copy of the bill below…