Democratic presidential candidate Hillary Clinton blamed adjustable rate mortgages for a record number of foreclosures throughout the country and in New Hampshire. So far this year, there have been 1,400 foreclosure filings in New Hampshire, compared to 150 filings in the entire state last year.
Senator Clinton said she will introduce legislation this fall that will require all individual mortgage brokers to be licensed. Currently they are not required to be licensed in New Hampshire. Brokers also would be required to tell their clients that the broker’s compensation increases when the client’s payments rise.
Lenders would have to include the cost of insurance and taxes in determining whether a client could afford a mortgage. The legislation would also eliminate the prepayment penalties on non-traditional mortgages.
Should this legislation be enacted, the burden of proving a home owner could afford their mortgage payments in the event their rates rise, would rest on individual mortgage brokers and lenders.
Rapid price appreciation in areas such as the west coast pushed prices too high for people, lowering demand, which could explain the increased national numbers, said Daren Blomquist, a spokesman for RealtyTrac.
“Coupled with that, people who had gotten into the homes at really high prices had to stretch themselves,” he said.
The numbers don’t correspond to what banks are seeing, said Kenneth Early, banking center president for Prosperity Bank. Banks are held under governmental standards that many mortgage companies aren’t, he said.
“The trend in the nation is that these mortgage companies made loans that the banks wouldn’t make,” Early said. “There’s reasons the banks didn’t make the loans and the reason is showing its face now.”
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