In the wake of the recent – and ongoing – “subprime lending meltdown,” federal regulators have announced “beefed-up” guidelines according to an article in this past weekend’s Wall Street Journal, aimed at curbing weak underwriting standards for subprime mortgage loans. The guidelines “require more than 8,000 federally regulated lenders to underwrite loans based on a borrower’s ability to make payments on a loan’s adjusted rate and not just its low introductory rate.”
The Federal Deposit Insurance Corporation’s Advisory Committee on Economic Inclusion will be hosting a second meeting in Washington on July 16th. focusing on the subprime mortgage issue.
There’s quite a bit of related federal legislation in the works, too:
· Senate Bill 1222, introduced April 25th. directly addresses the issue of “mortgage transactions which operate to promote fraud, risk, abuse, and underdevelopment.
· House Bill 2061, introduced April 26th., seeks to “amend the Real Estate Settlement Procedures Act of 1974 to prohibit any person, in connection with a subprime federally related mortgage loan, from providing mortgage lending or brokerage services unless such person is certified by the Secretary of Housing & Urban Development.”
· House Bill 1427 deals with “fannie mae” and “Freddie mac” issues
· House Bill 1852, in part, would “modify requirements governing the maximum principal loan obligation and cash downpayments by mortgagors in eligibility criteria for mortgage insurance.”
Perhaps the most innovative or ambitious in it’s undertaking is Senate Bill 1299, which would “amend the Truth in Lending Act to deem a mortgage broker, in the case of a home mortgage loan, to have a fiduciary relationship with the consumer, and subject such broker to all federal and state requirements for fiduciaries.” (See article)
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