Reforming the mortgage industry is being considered as one of the most potentially effective ways to address the present foreclosure crisis. A House Bill, authored by Massachusetts Representative Barney Frank, is currently being debated in the House Financial Services Committee. The mortgage reform bill will be instrumental in preventing another foreclosure crisis in the future. Last October, consumer advocates voiced their concern that the changes in the lending guidelines do not fully address the problems in the industry.
But after a couple of weeks, the mortgage reform bill has now received two key endorsements from Representative Spencer Bachus and Representative Judy Biggert. These endorsements will certainly help avoid a political fight.
Amendments included in the mortgage reform bill include assigning the Federal Reserve as regulator, establishing the liability of the secondary market as well as strengthening the protection of the lenders against frivolous lawsuits. The said bill will still have to be cleared by the committee before being introduced to the House floor.
The current foreclosure crisis felt all over the nation is basically being blamed to relaxed lending guidelines. Borrowers are not protected from predatory lenders and at the same time, not allowed to exhaust all possible options to stop foreclosure due to time constraints. Lenders, on the other hand, are not protected from claims of illegal practices.
Last year, over one million homes were lost to foreclosure and millions more are expected in the next couple of years. About 14 percent of the total 2.2 million subprime loans are already in default and the scheduled reset will surely add more. Nevada, California and Florida lead the nation’s list of states with highest foreclosures rate and 3rd quarter records showed a 30 percent increase from last quarter.
For more of the latest news on the foreclosure crisis, you should check out Foreclosure Listings NationWide.
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