Preventing fraud and keeping the consumer informed are goals that should be praised, but these reforms need to be balanced with protecting the rights of future home buyers.
The subprime market often is the only outlet for obtaining financing for a home purchase. The subprime market emerged from consumer demand for such loans, which provide a second chance for many borrowers and a chance to fulfill the dream of owning a home.
Many of the new proposed laws make providing subprime loans undesirable for lenders. As a result of these well-intended reforms, thousands of lower- and middle-income Americans would be unable to afford a home.
This is already a problem, as cautious mortgage companies are raising their loan standards, making qualifying for any kind of loan more difficult.
We must be careful not to destroy the rights of one group while protecting another. Aldous Huxley described this dilemma well when he noted, “Hell isn’t merely paved with good intentions; it’s walled and roofed with them.”
Matthew Glans ([email protected])is legislative specialist for insurance and finance at The Heartland Institute.