Something I don't understand about this policy...
The state House took steps yesterday to ease the financial crunch that has left thousands of families scrambling to avoid losing their homes.Five bills that address how mortgages are sold were approved. The legislation would tighten oversight of real estate appraisers, let banking regulators disclose discipline taken against mortgage brokers and bankers more quickly, and make information about delinquent loans more readily available.
It also would ban prepayment penalties for loans of $197,000 or less, an amount that would be adjusted for inflation in the future, and create a single type of license for all mortgage originators.
What is magical about $197K? I understand that a lender might want to require a minimum amount of interest to be paid on a loan, to help the lender determine the most effective use of capital. However, I don't understand why it should be couched as a penalty, rather than a specific payment requirement. And I think legislators ought to explain in public what the magical reason for $197K would be for penalties - it seems arbitrary but we all know it isn't, so what's the reasoning?