But
he hates a new state regulation designed to thwart predatory lending
that requires certain borrowers to receive financial counseling before
being granted a mortgage, because he says it will hurt property values
on the Southwest Side.
"This is a bad, bad
law," Medina said, who along with other Southwest Side real estate
agents fear that the extra layer of bureaucracy will cause long delays
in closing deals. "It's going to hurt the market."
Medina
is not alone. The anti-predatory lending law, which applies to 10 ZIP
codes on the Southwest Side, has drawn complaints from real estate
agents, mortgage brokers, lenders, title companies and even the
National Training and Information Center, a non-profit which had
advocated against predatory loans. Since the four-year pilot law took
effect Sept. 1, more than a dozen lenders have suspended business in
the 10 ZIP codes.
"My biggest concern is
that it might make credit unavailable in these areas," said Sam
Finkelstein, community reinvestment organizer at NTIC. "Everyone I've
talked to is united in opposition to this."
The
law's intent was to steer people away from high-cost, high-interest
mortgages, which can lead to foreclosures and hurt neighborhoods by
causing poverty and abandoned houses.
A
spokesman for the law's sponsor, Illinois House Speaker Michael Madigan
(D-Chicago), said the law will help drive out predatory lenders.
"Certain
elements fought this bill tooth and nail," said Steve Brown, a
spokesman for Madigan, whose district is in the targeted area. "It's
not surprising that these elements and their allies have found new
things to complain about."
Dean Martinez,
secretary of the Illinois Department of Financial and Professional
Regulation, said the program is "working more smoothly than we
anticipated." He said he doesn't anticipate delays as a result of the
law.
"Whenever a new law passes, people
are nervous," he said. "We hope that the way we interpret the law, it
will be a smooth, seamless process, and people's worries will be
relieved."
Under the law, if a borrower
working with a mortgage broker in an affected ZIP code applies for a
loan, all of his credit information and terms of the loan are entered
into a special state-run data base.
The
ZIP codes chosen for the pilot program are "troubled" Chicago
neighborhoods, although not necessarily the worst, in terms of the
number of foreclosures, said Geoff Smith, project director at the Woodstock Institute.
If
a borrower's credit score is 620 or less, or if there are other
triggers, a borrower must get financial counseling from a U.S. Housing
and Urban Development-approved counselor to make sure the borrower
knows what he's getting into, though a counselor can't stop the loan. A
borrower working through state or federally chartered banks is exempt.
The
mortgage broker must pay the $300 fee for counseling. Every mortgage
must include a certificate of completion or exemption before it can be
recorded.
Real estate professionals complain that they don't mind the law's intent, but the devil's in the details.
"The
bill's heart is in the right place," said Dan Green, a mortgage planner
with Mobium Mortgage, who runs a blog that has been collecting
information on the new law. "The means through which the law is
structured may be having unintended consequences."
Potential
problems include delays in closing, finding counselors, and nervous
lenders who don't want to deal with the bureaucracy and so are getting
out.
Real estate agent Rafael Alvarado, of
Century 21 Salamanca in the West Lawn neighborhood, said the new
procedures could add at least 34 days to the process of closing a loan.
"That's
what's scaring people. They don't know how it will work," said
Alvarado. He fears the law will lead to discrimination against sellers
in the affected areas, since buyers could decide to go outside the ZIP
codes to avoid the headache.
"If you're going to have a law on the books, apply it to all," said Alvarado. "It should apply to everybody or nobody."
He also said the law steers business to banks and away from mortgage brokers.
Kristen
Komara, director of financial services for The Resurrection Project,
said possible delays in the loan process are a legitimate concern.
"Home sellers might say 'I don't want to wait for these buyers'," said
Komara, whose organization will provide financial counseling under the
program.
She said counselors have gotten
together since they learned about the bill to try to make the process
as smooth and consistent as possible, Komara said.
"Sometimes
there's a lot of crying and yelling before people know what the true
facts are going to be," Komara said. "There are things that could have
been done to make it a better process, but at this point, it's going to
be what it will be."
She said she wants
lenders and brokers to know that counselors will work with them and not
to be scared — "unless it's a predatory loan."
WHO'S AFFECTED
The
new anti-predatory lending law, popularly known as HB 4050, changes
mortgage lending rules in 10 ZIP codes on the South Side for four years.
Under
the law, which took effect Sept. 1, borrowers using mortgage brokers
must get financial counseling if their credit scores fall below 620, or
if there are other triggers.
The affected ZIP codes are: 60620, 60621, 60623, 60628, 60629, 60632, 60636, 60638, 60643 and 60652.
Areas
affected include Gresham, Lawndale, Little Village, Roseland, Pullman,
Cottage Grove, West Lawn, Chicago Lawn, Marquette Park, Ford City, Gage
Park, Archer Heights, Brighton Park, Garfield Ridge, Clearing, Bedford
Park, Vittum Park, East Beverly, Longwood Manor, Morgan Park,
Washington Heights, Ashburn, Wrightwood and Marycrest.