| Senator Rob Kane (R-32), a ranking
member of the General Assembly’s Banks Committee,
said Connecticut homebuyers will benefit from provisions
of a comprehensive new state law that clearly describes
the responsibilities of mortgage brokers.
“Among other things, this new law regulates
mortgage brokers the way banks are already regulated.
For the first time, we clearly spell out what we expect
of mortgage brokers. Our intent is to provide Connecticut
with a safer, better regulated lending environment that,
hopefully, will protect us against a future reoccurrence
of the current mortgage crisis,” said Senator
Kane.
The new law (PA 08-176, AAC Responsible Lending
and Economic Security) describes several responsibilities
imposed on mortgage brokers, in addition to others required
under federal, state or common law. Those responsibilities
include requirements that mortgage brokers:
• Use reasonable care, skill and diligence, and
act in good faith in dealing with borrowers.
• Make reasonable good faith efforts to secure
mortgages that are in borrowers’ reasonable best
interests considering all the circumstances reasonably
available to brokers, including rates, points, fees,
charges, costs and product types.
• Ensure that the cost of credit is reasonably
appropriate considering borrowers’ level of credit
worthiness and other underwriting concerns.
• Notify other lenders of payment obligations
before closing, if more than one mortgage is to be made
by different lenders.
Senator Kane said that spelling out our expectations
of mortgage brokers is just one aspect of this far-reaching,
comprehensive new law. Among other things, it also creates
one new program and expands an existing program to help
homeowners avoid foreclosure, and authorizes the state
to buy mortgages and place eligible borrowers on an
affordable repayment plan. As the Senate’s ranking
member of the legislature’s Banks Committee, Senator
Kane serves on the Commission on Nontraditional Loans
and Home Equity Lines of Credit created by this law
to look at how the mortgage crisis is affecting us and
recommend ways the state can help.
“It is our hope that this new law will not only
help Connecticut alleviate the current mortgage crisis,
but also help us address the issues that contributed
to this situation,” said Senator Kane.
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