Congress Takes Their Time In Discussing Mortgage Reform
Posted by David Schneider | December 31, 2007

Amidst this troubled housing market, thousands of American homeowners are dealing with foreclosures or mortgage payment resets. Their situation seems to be getting worse, with no outlook of change or assistance. Unfortunately, congress is showing no signs of immediate action.

The House Looking Out for the Consumer

The house has become very much involved in attempting to fix the suffering mortgage market and appear to be passing some relief measures. One in particular is H.R. 3915, the Mortgage Reform and Anti-Predatory Lending Act of 2007. This bill is currently pending in congress. However, the outlook of it passing any time soon looks dismal.

Mortgage Reform and Anti-Predatory Lending Act of 2007

This specific bill is designed to put structure and provisions in the mortgage lending market. Some have referred to this bill as the plan to help repair the current situation. This is simply not true. The bill focuses on changing the lending system to prevent future crisis.

The main goal of this bill is to eliminate the negligent nature of the current mortgage lending market. It calls the licensing and registration of mortgage originators, a minimum standard for mortgages and a limited liability to secondary securitizers who sell interest for mortgage loans beyond the standards. By providing certain restrictions and provisions, the consumer will receive some protection. It will lessen the foreclosure market and hopefully prevent recessions similar to the one we are currently experiencing.

Why the Senate Is Stalling Legislation

There are numerous reasons the senate has chosen a sluggish approach to any housing reform bills. Some republicans within the senate appear to be unsympathetic to the mortgage market's current situation. Others are allies with private mortgage insurance companies. Were they to go along with the Federal Housing Administration's (FHA) reform bills, their allies would have to contend with the proposed low-down payment market. Another excuse for the senate is that the FHA's reform proposal requires an extensive floor debate.

The Negative Buzz Around the Mortgage Reform Bill

The buzz about the Mortgage Reform and Anti-Predatory Lending Act of 2007 hasn't all been positive. Those within the mortgage industry have been gathering concerns and voicing them through blogs and lobbyists. Most people objecting to this bill believe it harms the "free market's ability to enforce responsibility on behalf of the borrowers." Others feel that these restrictions will also lock some potential borrowers out of the mortgage market.

Another anti-bill supporter is the Blue Dog Coalition of moderate and conservative democrats. They have expressed the belief that this bill could get in the way of applying the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA). The BAPCPA passed in 2005. It promises that the borrower has the ability to pay back some of his or her debt, as well as maintain access to the bankruptcy system.

With all these justifications coming to and from the senate, all seems to have come to a standstill, and the cries for help from struggling homeowners remain unheard and ignored.