Illinois Mortgage Lending - HB4050

Office of the Governor
Hon. Rod Blogoivich
c/o Jay Brown, State Service Representative
207 State House
Springfield, Illinois 62706

Re: HB4050

Dear Governor Blagoivich:

Pursuant to my conversation with Mr. Brown via telephone today, this letter is to express my discontent with HB4050 for the following reasons.

If passed into law, the bill would discourage lenders and brokers from doing business in zip codes 60623, 60629, 60643, 60638, and 60652 due to increased burdens in processing and counseling fees.

The decrease in the number of lenders and brokers will result in less choices for consumers in these areas. It will also encourage predatory lending because the few lenders that are willing to do business in these areas will simply charge higher rates and fees to compensate for the extra processing for compliance requirements and mandatory counseling fees.

For me, as an individual broker, it will also affect me because the originating company will simply pass the increased processing fees and counseling fees onto me by slicing the increased costs off the top of the commissions before calculating my percentage.

In addition, the 3\% rule for subprime loans further restricts brokers from charging fees to compensate for these increases as well. This will simply make it unfeasible to do business in these areas at all if the property values are not high enough to compensate for the differences. As a result, lower, and middle class consumers will be shut out altogether.

In short, the consumers in these areas will not be afforded the best rates and financial products in the marketplace, and the lower and middle class consumers may not be afforded any financing at all.

The industry already self-regulates the issues this bill is trying to address through competition. As a broker, I always shop around for the best rates for my customers and without getting too greedy because for me to do so would allow another broker the opportunity to undercut me and take away my clients business, future referrals, and it would affect my reputation. The competition between brokers and lenders, fighting to get the best deals for their clients to get their business, is ultimately what provides consumers with the best financial products in the marketplace.

For these reasons, I respectfully request that you do not sign HB4050 into law and allow competition to provide the best financial products and services for consumers.

Kindest regards,