Today, Thursday November 15, 2007, the House of the U.S. Congress passed a bill aimed at mortgage lenders, that requires additional safeguards in the home loan process to prevent more mortgage loan crisis.
In a reaction to the huge number of foreclosures
H.R. 3519 known as “Mortgage Reform and Anti-Predatory Lending Act of 2007” , sets standards and more guidelines for the mortgage loan industry in order to prevent more homeowners from falling into the foreclosure abyss.
It is expected that more than 2 million mortgage rates will adjust up in 2008, possibly triggering an avalanche of foreclosures in effect crippling the home loan and other financial markets further.
Of course, there is always some form of opposition on the political side of this bill. Some of the Republicans are saying that this bill will make it harder for people to refinance their mortgage loans with all of these requirements of mortgage lenders. In effect, under this legislation, the home owner seeking to refinance their home loan, may not qualify for a new loan and this will also fuel the foreclosure crisis! Below are a few things the legislation will provide.
According to AP- Associated Press, the bill makes these provisions,
_Ban lenders from making loans that borrowers don’t have the ability to repay;
_Prohibit lenders from steering homeowners into refinanced mortgages that don’t provide any benefit and create fines of triple the broker fee and costs;
_Make Wall Street banks that package mortgage securities into investments liable for violations of lending laws;
_Prohibit excessive fees for payoff information or late payments, the financing of points and fees and practices that increase the risk of foreclosure like balloon payments and encouraging borrowers to default; and
_Create a nationwide licensing system for mortgage brokers and bank loan officers called the Nationwide Mortgage Licensing System and Registry.
The House passed the bill 291 to 127. Now the bill heads for the Senate for vote.
It seems a bit early to see if this bill has the muscle to help homeowners save homes from foreclosure or stop foreclosure, but it will need further review for it’s real intent.
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