SECOND - the root of the problem must be addressed. While we respect NAR's basic ideas listed in the article above, the solutions presented primarily address the symptoms, and not the problem itself. Understanding the issue and asking "Why?" is paramount to developing a true solution for the consumer.

THIRD - Informed consent must be mandatory in all lending practices. "Informed consent" does not mean disclosing a potentially predatory practice in small print on the eighth page of a twelve page contract. Nor is informed consent achieved by having a representative of the lending institution gloss over any such practice in a twenty minute sales speech in order to secure the loan.

In reference to item one we believe that less legislation is better than more legislation as long as it is not zero legislation. While legislation will serve to provide some guidelines and standards in the industry, it would be impossible to enact legislation that would cover every predatory practice and would likely harm otherwise good subprime loans. But neither can the issue be left entirely to private organizations such as NAR. Some responsible form of legislative protection is in order. Additionally consumers need to be informed as to the difference between a Realtor and a real estate agent, and realize that Realtors are held to a much higher standard, and, in theory, should provide them with protections greater than that provided by a real estate agent that is not a Realtor.

In regards to item two we have two competing forces in the marketplace from the lending institution. The first is the institution itself which enjoys the increased revenue from mortgage loans that do not go into default, but abhors the ones that do go into default as they are extremely costly for the institution. No one wins in a foreclosure!

As such lending institutions have a framework in place to help identify good subprime loans from bad, but the nature of competition is such that some institutions will institute looser credit requirements in order to obtain the business that is rejected from institutions with a tighter credit structure. Couple those looser credit requirements with a commissioned salesperson who is solely interested in benefiting his bottom line and we lay the roadwork for predatory practices.

However removing the commission structure for the sales staff at a mortgage lending institution could significantly affect the bottom line of the institution itself, as the lazy salesperson could then make as much as the one that works hard to obtain good loans.

This situation leads to the issue discussed in item three; informed consent.

Although a scream of protest will likely go up throughout the world of real estate agents - the true solution to the problem is to hold the real estate agent responsible for providing true informed consent to the consumer.

Currently agents act as facilitators, or go-betweens for most steps of the purchase and sale process. Although this allows for less training and more salesmanship skills, the time has long passed in which real estate agents should have a significantly more intimate knowledge of the process - especially when it deals with mortgage lending.

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