House Financial Services Committee Approved H.R. 3915 - Mortgage Reform and Anti-Predatory Lending Act of 2007
House Financial Services Committee last night approved by a 45-19 vote a bill (H.R. 3915) intended to address the nation's subprime lending problems. The legislation (if passed) would, among other things:
- Require the licensing of individual mortgage brokers;
- Require bank employees originating mortgages to be registered through their primary regulator;
- Create minimum standards for all mortgages; and
- Expand the scope of the Homeownership Equity Protection Act.
ABA and America's Community Bankers -- which have been consulted on the bill but do not endorse it -- applauded recent improvements to the legislation. For example, a provision was added that would allow bank regulators to exempt from registration small banks making few mortgage loans.
"We recognize that this legislation seeks to address the source of most [subprime] problems -- the loosely regulated and largely unexamined mortgage originators that operate outside of the [bank] regulatory structure ... ," said Floyd Stoner, ABA executive director of congressional relations.
"However, we remain concerned that this legislation may have an unintended negative impact on both insured depository institutions and their creditworthy customers seeking to buy homes," he said. "We plan to work with the committee on further modifications as this legislation moves to the House floor."
Read a bill summary. Thanks to ICAP for the summary!
Besides the blog and news coverage that OpenCongress has been gathering on this bill, the two big New York papers published competing editorials that are required reading for understanding the major issues this bill raises:
The New York Times: Putting an End to Abusive Lending
The Wall Street Journal: A Sarbox for Housing
Housing May Be Victim – If Pending Legislation Passes
This week, Congressional Democrats introduced The Mortgage Reform and Anti-Predatory Lending Act of 2007. If it passes this sweeping legislation would establish a "nationwide registration regime." However, industry experts warn that the legislation would also wipe away qualifying benefits for adjustable rate and interest only borrowers, and virtually eliminate No-Doc and Low-Doc loans, putting even more strain on the already troubled housing market.
Two Percent Rate Raise For All Home Loans When Proposed Legislation Passes
Industry leaders are in an uproar about legislation that could have devastating effects for the real estate world. The proposed bill they fear was intended to help homeowners in foreclosure, but if enacted, the bill may drive up interest rates by as much as 2% for homebuyers – dissuading new buyers from even entering the market and ushering in dark times for an industry that's already weathered its share of storms.
More Loan Restrictions Likely to Cripple Home Sales
Real estate and mortgage professionals can expect industry woes to "get worse before they get better". So says Fed Governor Randall Kroszner who spoke at the Consumer Bankers Association Fair Lending Conference in Washington, DC. Kroszner hinted that more loan restrictions such as mandatory escrows and full-doc loans for borrows are imminent and necessary to get us out of the catastrophic mess we're in. However, more loan restrictions will only keep more buyers out of an already slow market.
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