Within the obtain Public Comment, OCCR identified the growth, or at the least the perception of the development, that lenders had been increasing charges and points to an amount just beneath the limit that will qualify that loan as an even more heavily managed high-rate, high-fee “Section 32” loan. We asked commenters to share with us whether this perception had been a real possibility, and when what exactly might be done about this.
Our conclusion is the fact that fee-padding is occurring in Maine, so that as one method to deal with the training we have been suggesting (see proposed bill connected as Appendix # 1, part 2) that the limit of “points and fees” that creates area 32 therapy, be lowered from 8% of that loan quantity, to 5%.
We base this proposition from the presumption that the method of getting loans in this range (between 5% points and fees, and 8% points and charges) is, in financial terms, “elastic, ” such that developing a fresh, reduced degree will perhaps not end up in an unwillingness in the section of loan providers to really make the great majority of the loans that currently fall within the range between 5% points-and-fees, and 8%. Continue reading “Issue #15: Preventing “fee-padding””