ALDERMAN BEALE COMMENDS GOVERNOR BLAGOJEVICH FOR
SUSPENDING HOUSE BILL 4050
Alderman Anthony Beale says House Bill 4050 is not for 9th Ward residents and Illinois Governor Rod Blagojevich apparently agrees.
Even though HB 4050 became law January 1, 2006 Governor Blagojevich suspended the law which requires counseling for homebuyers with less than good credit. Alderman Beale, along with other state and local legislators, title companies, mortgage brokers, banks, real estate agents, community leaders, residents and the governor believes the bill is actually hurting the people it was designed to protect.
“I commend the governor for recognizing that HB 4050 was creating an uneasiness on the community and leaders because of the adverse affects it was having on the residents of the targeted areas”, said Alderman Anthony Beale. Beale believes that HB 4050 may have started out with good intentions, but there must be a new strategy. Beale added, “Aldermen, banks, community residents, brokers, city and state legislators need to sit down and discuss an alternative plan that will hamper predatory lending and stop excessive home foreclosures.”
House Bill 4050 only affects 10 South Side zip codes in Cook County: 60620, 60621, 60623, 60628, 60629, 60632, 60636, 60638, 60643, 60652. Many of the 9th Ward residents live in the 60628 area.
The bill was introduced as a four-year pilot program in Cook County, designed to protect mortgage applicants from unscrupulous loan originators. It requires so-called “high risk” individuals to receive financial advice from federally approved financial counselors before completing a mortgage transaction. “High Risk” individuals are classified as those individuals having a credit score of less than 620. The bill also affects persons with a FICO score between 621-650, given certain conditions. Having to undergo counseling before a loan can be processed slows down the sale and makes it more expensive.
There are also privacy issues concerning HB 4050. When credit challenged borrowers in the affected zip codes apply for a loan through a mortgage broker, the borrower’s credit information and terms of the loan are entered into a state database.
Federally chartered banks like Charter One, Chase and Bank of America are exempt from HB 4050. Persons considered as “high risk” individuals many times find it difficult to secure mortgage loans from banks. The bill only applies to state-chartered loan originators (i.e., mortgage brokers and local mortgage bankers). While HB 4050 may have started out with good intentions, it is limiting affected individuals access to mortgage resources.
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