The Colorado Senate has passed SB 216 sponsored by Jennifer Veiga (D-Denver) that would impose stiff financial penalties on mortgage brokers who make loans to home owners who they know can’t pay back the loan. In other words, it is now the lenders responsibility to save would be homeowners from themselves. This is another nannyism coming out of the Democrat legislature and a prime example of how differently Republicans and Democrats view the world.

Democrats think everybody is somehow a victim – in this case, borrowers must not be capable of determining their own capacity to manage their finances, even when we’re talking about buying a home. So, if someone gets in over their head, surely it’s not their own fault, it must be the lender who is to blame and it is government’s job to punish them with a big fine. According to the Rocky Mountain News [link] every Democrat in the Senate voted for SB 216. Only one Republican, Steve Johnson from Loveland supported the measure.

Democrats think it is government’s job to think for people, to save them from themselves, and to hold their hand through life. Democrats can always find someone else to blame if things go wrong, or life deals you a curve ball. If everyone is a victim, then everyone needs someone to take care of them, and that is obviously the role of government – and job security for Democrats.

Republicans believe in personal responsibility and limited government. They believe that individuals, not government, are likely to be the best stewards of their hard earned money, and Republicans also believe that if an individual makes a mistake then they need to accept the consequences and responsibility for that, too.

Back to the home mortgage business – Republicans believe that government has a role in making and enforcing the rules of the road for the business, but they also recognize that home ownership is a cornerstone of the personal freedom and liberty we enjoy in America. Home ownership correlates strongly with stable families, job security, wealth accumulation, and economic advancement. A large percentage of entrepreneurs begin their first business by utilizing the equity they have accumulated in their home.

Bad apples certainly exist in the mortgage loan business just like any other sector of a free market economy. The way to resolve that, though, is not to throw the baby out with the bath water. Senator Veiga’s legislation will chase legitimate lender’s out of the Colorado market, make loans for first-time buyers more difficult to find (what lender wants to make a loan that they may end up getting penalized for making?), and further damage an already struggling housing market in the state. Additionally, the threat of litigation and liability – and this legislation is ready-made for the trial lawyers – will undoubtedly get factored into pricing of loans and drive up mortgage rates for all buyers.

Democrats pride themselves in being the “party of the little guy.” This is a prime example of the hypocrisy of their claim, because the person who really gets hurt by this misguided piece of legislation is the person whose credit history may not be perfect, the first-time buyer, or the young couple trying to get a home for a growing family.

Bottom-line, Democrats always over-govern and over-think because they believe it is their job to do the thinking for people. Republicans believe it creating an environment that causes, encourages, and stimulates people to think and act for themselves – and then rewards them for their efforts.