Mortgage Finance
Mortgage Finance
By J. Bradley Jansen
March 22, 2001
Our developed capitalist economy offers us incredible benefits such as mortgage finance possibilities largely unknown to the rest of the world. However, the system is not perfect. Improvements should be made both to the laws regulating this process and also regarding business practices.
The most important and immediate step for most consumers would be to educate themselves more regarding the issues involved with purchasing a house—especially for first-time homebuyers. Historically not that long ago, the closing on a new home was a much simpler process.
Changes in the regulations, new technologies and recent changes as a result of the adoption of the Gramm-Leach-Bliley Act mean that the home buying process is very different that it used to be and likely to continue changing rapidly. Privacy is an issue that takes on greater importance with all of these changes.
New technologies mean that online applications and other possibilities have opened up allowing consumers new opportunities to search for the best loan for them. New financial products are developed and tailored to attract new customers: gone are the days when everyone had a 30-year, fixed mortgage from the local S&L. A whole new vocabulary has been introduced giving consumers greater choice.
Just as the new legal landscape now allows new business groupings to form, we can expect even more changed in mortgage finance. We should be careful that outdated laws do not expose us to new privacy violations. The Home Mortgage Disclosure Act was intended to stop redlining where banks did not lend to inner-city minorities. Capitalism has solved that problem: online transactions do not show the race of the applicant.
The HMDA requires the collection of private, sensitive information about us such as race and ethnicity even when an individual affirmatively marks a box choosing not to disclose the information. With new technologies enabling the sharing and selling of data in new, easy ways, it is time to protect our privacy from an outdated law by repealing the Home Mortgage Disclosure Act.