We find out the reason behind the delay.
Remember how homebuyers complained about getting scammed in predatory lending? The whole mortgage fiasco has been eclipsed by other issues that no legislation was approved to curb this practice. Back in 2005, Representatives Mel Watt and Brad Miller introduced the Federal Anti-Predatory Lending Bill to prevent mortgage borrowers into buying homes that they couldn’t afford. It’s patterned after the North Carolina law that has been successful as it reduced predatory subprime and abusive lending in the state. This month, the two congressmen will be pursuing the passing of the bill again.
Now you may wonder why a bill such as this can’t seem to get its way to the Congress. If it’s for the benefit of borrowers, then how come it’s taking so long to earn our lawmakers’ nod?
First, it takes responsible people to make responsible decisions. Clearly, we’ve had worse approved housing bills before this. The Mortgage Reform and Anti-Predatory Lending Act of 2007’s main purpose is to prohibit against doing a loan that is not in the borrower’s best interest. However, it has been heavily criticized by real estate professionals for banning broker compensation from lenders. Likewise, lawmakers will be the subject of ridicule if they pass a bill so easily without careful evaluation and one that needs to be revived four years after.
Second, Rep. Watt remains infamous for going against the plan of increased oversight over Fannie Mae and Freddie Mac during the Bush administration. The comments he made back in 2003 obviously contradicts his actions today. That puts a lot of his colleagues wondering what he really has in mind behind all these.
Finally, this could spark a new debate between real estate brokers and state officials on drawing the line between adopting a nationwide rule for subprime mortgages and their own state’s standards. Most probably, some states would repel against a few restrictions stated in the bill. Definitely, it would take months of deliberation to clear some limitations.
So even though default rates are rising, it’s not that easy to stop foreclosures just by passing a bill into law.