Ahead of the Bell: Mortgage Legislation
|November 6, 2007|
WASHINGTON (AP) -- Legislation that would make sweeping changes to the home loan industry is up for a vote Tuesday in a key house committee amid intense lobbying from banking industry groups.
The bill proposed by Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee and other Democrats would outlaw abusive lending practices as defaults and foreclosures surge, especially among loans made to people with weak credit.
On Tuesday, the Democrats' bill won the support of the committee's top Republican, Rep. Spencer Bachus of Alabama, who called it "an example of how people with different political philosophies can work together."
The bill would bar incentive payments given to mortgage bankers or brokers for signing up borrowers for overly expensive loans.
It also would make Wall Street banks that package mortgage securities into investments liable for violations of lending laws, mandate licensing for mortgage brokers and bank loan officers and limit penalty charges for borrowers who make their payments early.
The Mortgage Bankers Association said in a letter to Frank and Bachus on Monday that the bill should override any state or local laws that impose more stringent regulations. Lenders, the group said, should not have to work "with dozens of different standards" nationwide.
Still, other Republicans have been critical of the effort, arguing it would make it harder for borrowers trapped in loans due to reset at higher interest rates to refinance into new loans.
A discussion of the bill, during which time amendments may be proposed, is scheduled to start at 10 a.m. EST.
Frank's bill appears likely to pass the House by year-end. Similar mortgage legislation was introduced in May by Sen. Charles Schumer, but has been stalled.
The committee also plans to vote on a bill by Rep. Paul Kanjorski, D-Pa., that would attempt to rein in abuses among property appraisers. That bill won backing Tuesday from New York Attorney General Andrew Cuomo.
Last week, Cuomo sued a subsidiary of Santa Ana, Calif-based First American Corp., accusing it of bowing to pressure from major home lender Washington Mutual Inc. to use a list of appraisers who inflated home appraisals.
Washington Mutual said it is suspending its relationship with the First American subsidiary, eAppraiseIT, and that it plans to further investigate the situation. First American denied the allegations.
Coopyright 2007 Associated Press