Further, the mortgage banking industry tried to use the rating agencies' opinion to get rid of other, unrelated provisions that they didn't like in GAFLA, Saffert says.
Loretta Salzano, a partner in Franzen and Salzano PC, a Norcross, Georgia, law firm specializing in lending and financial institution work, watched 22 customers leave the state after GAFLA went into effect.
Option One Mortgage Corporation, Irvine, California, also changed its wholesale purchase guidelines and stopped making loans subject to GAFLA in January, although it followed GAFLA's rules from the time the law went into effect in October 2002.
Fannie Mae and Freddie Mac continue to purchase loans in Georgia despite GAFLA. "It's our job to provide liquidity nationwide," says William Senhauser, head of operating initiatives for Fannie Mae.
Federally chartered thrifts in Georgia caught what looks like a break from GAFLA when the Office of Thrift Supervision (OTS) pointed out in a January opinion letter that Congress gave OTS, and not the states, "the task of determining the best practices for thrift institutions."
Comptroller of the Currency (OCC) was collecting comments on whether or not to exempt banks from GAFLA. In the meantime, it issued guidance on how to lend to low-income customers in a nonpredatory fashion.
Even if revisions to GAFLA remove the assignee provision, there's still plenty in the law to make a mortgage banker reach for the TUMS[R].
The reasonable, tangible net benefit provision of GAFLA applies to loans refinanced within five years of origination.
If the borrower's original loan has special terms, say down payment assistance, GAFLA mandates that the lender must know about those benefits.
Countrywide's Seebach also predicts that predatory lending laws could change the landscape somewhat in the secondary market if more laws like GAFLA get enacted in other jurisdictions.
Others argue that GAFLA will cause very few problems outside the subprime market.
First, compliance with a law like GAFLA increases the cost of doing business, especially for multistate lenders, and it can create a hurdle to clear to get into a market.