WASHINGTON (AP) - The House is expected Thursday to approve a bill that would overhaul the home loan industry, which has been wracked all year by soaring defaults and foreclosures.
Democrats, consumer advocates and some moderate Republicans want to outlaw abusive lending practices aimed at borrowers with shaky credit, arguing that the federal government could have prevented the mortgage market's current problems years ago had stronger lending laws been in place nationwide.
Other Republicans and business groups, however, argue that the bill would cut off access to loans just when the mortgage market is in trouble. The White House said Wednesday it has 'concerns with the bill as drafted' but did not threaten a veto.
The bill's future is uncertain in the Senate, where Sen. Christopher Dodd, the Connecticut Democrat and presidential candidate who heads the Senate Banking Committee, has said he wants to pursue his own approach to the issue, but has not yet introduced a bill.
Next year, though, many experts expect mortgage defaults to keep soaring, and worries of a recession remain.
'If the economy is more broadly affected by the housing slowdown, there will be increased pressure to get this bill done,' said Howard Glaser, a mortgage industry consultant and a Clinton Administration housing official.
Financial markets around the world have been rocky for much of the year amid worries about the growing scope of losses in investments tied to U.S. home loans. Bear Stearns Cos. and Britain's HSBC Holdings PLC were the latest to predict losses in the billions.
On Wednesday, the American Financial Services Association, which represents major lenders including Countrywide Financial Corp, and Citigroup Inc., urged House members to oppose the bill, saying it would expose lenders to lawsuits, forcing lenders to choose 'whether to increase the cost of certain loans or stop making them.'
The bill would:
-- ban lenders from making loans that borrowers don't have the ability to repay;
-- prohibit lenders from steering homeowners into refinanced mortgages that don't provide any benefit;
-- make Wall Street banks that package mortgage securities into investments liable for violations of lending laws; and,
-- create a nationwide licensing system for mortgage brokers and bank loan officers.
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© 2007 AFX News
