The mortgage loan and the residential real estate industries have been facing challenging times for some time now. Homebuilders and investors have seen their real estate investments evaporate overtime, home prices keep declining, foreclosures continue increasing, and unsold home inventories keep rising.
Also, the subprime mortgage and credit crisis has dealt a serious blow to many mortgage lenders and mortgage brokers. Additionally, the impacts of the credit crunch, housing, and mortgages market have been grave on the economy. Herein, the responsible members of Congress have been eager to put legislation into place that would in future help avoid the current problems.
Lawmakers are attempting to pass comprehensive housing legislation through Congress that would impose strict standards on mortgage lenders, compel them to ascertain which loan is in the best interest of each borrower.
Home loan lenders protest that the proposed bill will expose them to possible lawsuits and force them to limit the quantity and the type of mortgage products offered. Also, a portion of the bill creates a national licensing system for home loan officers and mortgage brokers.
The national broker license has been an idea in the making by the American Association of Residential Mortgage Regulators (AARMR) since 2004. However, it took the current atmosphere of economics for the Congress to consider such a proposal. If the bill does become law, the AARMR and the Conference of State Bank Supervisors will oversee the system.
However, builders and mortgage lenders did show support for the mortgage refinance loan program in which the government will help in the mortgage refinancing of approximately 400,000 loans to new fixed home loans with low mortgage rates, and stricter regulation of government-sponsored private mortgage finance companies Freddie Mac and Fannie Mae.
Also, the bill increases the limits of home loans that can be purchased by Fannie and Freddie to $625,000, a jump from the traditional limit of $417,000, a permanent change; a current temporary increase in the loan limit of $729,750 is set to expire at the end of December 2008.
The Senate banking committee passed an earlier version of the legislation and the full Senate is likely to vote on the bill this week. Hopefully, the bill will restore the faith of consumers in the stability and security of the housing markets.
The American Financial Services Association, Mortgage Bankers Association, the Consumer Bankers Association, U.S. Chamber of Commerce, the Consumer Mortgage Coalition, and the Financial Services Roundtable are the main special interest opposition groups to the consumer friendly bill.