Preventing the mortgage mess of the future?
Once again displaying their amazing ability to leap into action after a problem has gotten far too serious, the members of the U.S. House of Representatives last week passed the lofty sounding Mortgage Reform and Anti-Predatory Lending Act of 2007. If members of the Senate pass their own version of the bill, and the president doesn’t veto it, the legislation will make it illegal for mortgage lenders to loan money to borrowers that they can’t afford to repay.
In two other key components, the bill would create a nationwide licensing system for mortgage brokers, and make banks that package mortgage securities into investments liable for lending violations.
To no one’s surprise, the bill has received mixed reviews, with some saying that it will prove ineffective in stopping the lending violations it aims to curb and others worrying that it will prevent large numbers of consumers from qualifying for home loans.
Again to no one’s surprise, some of the biggest names in the mortgage business are opposed to the bill. Kieran Quinn, president of the Mortgage Bankers Association, in a statement said that the bill will limit the availability of credit to “thousands of Americans who want to grab their share of the American dream of homeownership.”
Quinn’s statement is a bit over the top. Want to know when mortgage professionals are truly desperate when they’re fighting a piece of legislation? Look for the phrase “American dream of homeownership.” Mortgage pros trot it out every time a new regulation they don’t like is proposed. Isn’t it time for people to understand that owning a home isn’t the American dream for everyone? Isn’t it time we recognize that not everyone should own a home?
Regardless of that debate, every mortgage professional now cursing U.S. Rep. Barney Frank (D-Mass.) for sponsoring the anti-predatory lending act, has only themselves to blame. If mortgage lenders hadn’t been so greedy, making out loans to consumers who clearly did not have the income levels to pay them back, the government would not have been spurred, finally, into action.
Blame consumers, too. I don’t know how many borrowers knowingly stretched themselves to the limit financially just to get into that nicer and larger house, but I can confidently bet that it’s a huge number.
So, criticize Congress for, as is typical, reacting too late to a problem. Criticize legislators, too, for creating a bill that despite its good intentions probably won’t solve our current mortgage crisis or prevent another. But make sure you reserve a heaping dose of criticism for consumers and mortgage lenders, too: They, after all, are the ones really at fault.
Tags: Barney-Frank, HR-3915, Mortgage-Reform-and-Anti-Predatory-Lending-ActRelated Stories
POSTED IN: Breaking News, Buying a Property, Insights and Commentaries, Mortgage, Real Life Stories
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