Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: Road Walker who wrote (355842)	10/23/2007 2:20:40 PM
From: bentway	Respond to of 1577888

I spread it from elsewhere - all Americans should read it. Spread away.

To: Road Walker who wrote (355842)	10/23/2007 3:59:28 PM
From: tejek	Read Replies (1) \| Respond to of 1577888

What does everyone think about this bill? I think it is well intentioned but I think it would do more harm than good and many people would be 'redlined' out of mortgages. Bill Allowing Mortgage Lawsuits Expected to Stir Fierce Opposition By EDMUND L. ANDREWS Published: October 23, 2007 WASHINGTON, Oct. 22 — House Democrats introduced legislation on Monday that would for the first time let homeowners sue Wall Street firms for relief from mortgages that the borrowers never had a realistic chance of repaying. The measure, which is expected to generate intense opposition from the financial services industry, addresses some of the problems tied to the transformation of the mortgage lending industry from an often local business into a trillion-dollar global market for investors in search of higher returns. The bill is part of a broader measure intended to restrict what lawmakers and consumer advocates consider deceptive and improper lending practices, many of which were common among the millions of soured subprime mortgages to people with low incomes or poor credit histories. Critics warn that the bill could chill and perhaps freeze a huge source of capital that has helped push homeownership in the United States to its highest level. The legislation, introduced by Representative Barney Frank, Democrat of Massachusetts and chairman of the House Financial Services Committee, would require any mortgage lender to verify that the borrower has a “reasonable ability to repay” based on documented income, credit history and debt level. “The people who package mortgages and sell them into the secondary market were a major cause of the single biggest world financial crisis since the Asian crisis” of 1997-8, Mr. Frank said, “and it’s unthinkable that we would leave that undisturbed.” The congressman said that he expected his committee to debate and approve the measure next week, and that House leaders hope to bring it up on the floor in three or four weeks. Senator Christopher J. Dodd, chairman of the banking committee there, has outlined a separate bill against predatory lending. This would be the closest that Congress has ever come to legislating on the suitability of particular mortgages and blocking loans it deems too risky. More than two million people took out subprime loans in the last two years that offered relatively low initial rates but are to jump sharply when the introductory periods expire. Analysts predict that at least a quarter of these people may default and lose their homes. Under the House bill, people who can show that they never had a reasonable ability to repay the loans would still have to pay for their homes, but would have new statutory power to demand better deals from the lenders. They could demand that their original mortgage lender offer a better loan. Or they could demand relief from the Wall Street firm that bought the mortgage and resold it to investors. The measure would also restrict several practices that industry critics have long said were deceptive and amounted to “predatory lending.” It would prohibit incentives to brokers for steering borrowers to more expensive mortgages. It would sharply restrict prepayment penalties — something common with subprime loans, which effectively lock borrowers into the loans. Mr. Frank said the criteria for loans that had no realistic chance of being repaid would include those with monthly payments equal to more than half a person’s income. Lenders who offer loans that do not require the borrower to document his or her income or financial circumstances would also risk challenges. The basic approach to defining unpayable loans is similar to the guidance that federal bank regulators have long given to loan underwriters at banks. But about half of all recent mortgages in recent years — and the vast majority of subprime loans — were made by lenders and brokers who fall outside the federal banking system. Many of these are regulated by states, but the rules vary widely and some have almost no restrictions on the tactics that a lender can employ. Under the new bill, states would be required to set standards for mortgage brokers and lending. States that do not develop a standard would be subject to relatively strict federal standards, to be developed by the Department of Housing and Urban Development, that would require mortgage brokers to act “solely in the best interest” of the consumer. nytimes.com