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Mortgage reform bill picks up key backing
http://money.cnn.com/2007/11/05/real_estate/Frank_bailout_bill/index.htm?postversion=2007110514 ^ | 11-5-07

Posted on 11/06/2007 10:18:14 AM PST by Hydroshock

WASHINGTON (Dow Jones/AP) -- House Financial Services Committee Chairman Barney Frank, D-Mass., has secured two key Republican endorsements on his legislative plan to reform the mortgage industry, avoiding a potentially bruising political fight this week.

Rep. Spencer Bachus, R-Ala., the panel's top Republican, and Rep. Judy Biggert, R-Ill., another high-ranking member, have both signed on as co-sponsors to an amended bill that Frank plans to introduce before a committee vote on Tuesday.

"The most important fact about this compromise is that it has significant new safeguards to protect families from abusive lending," Bachus, who has long advocated for change in the mortgage industry, said in a press statement. "This is the culmination of discussions that began two years ago when I sent chairman Frank an outline for a subprime lending bill."

Among the changes, the bipartisan amendment includes the Federal Reserve among the regulators that would be responsible for implementing the new law. Also, the bill clarifies new secondary market liability.

"In addition to significant consumer protections, the bill also provides carefully crafted assurances that frivolous lawsuits will not disrupt the ability of capital markets to continue to provide the liquidity necessary to assist families to achieve the dream of owning a home," Bachus said

(Excerpt) Read more at money.cnn.com ...


TOPICS: Business/Economy; Government; News/Current Events
KEYWORDS: mortgageindustry; mortgages
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1 posted on 11/06/2007 10:18:15 AM PST by Hydroshock
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To: Hydroshock; Calpernia; cbkaty; Nervous Tick; ex-Texan; RockinRight; NVDave; Neidermeyer; ...

Economy/Credit/Housing Issues Ping List

If you want on or off this list let me know.


2 posted on 11/06/2007 10:19:04 AM PST by Hydroshock ("The Constitution should be taken like mountain whiskey -- undiluted and untaxed." - Sam Ervin)
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To: Hydroshock
You want to kill the mortgage market for years? - get the government involved...
3 posted on 11/06/2007 10:22:52 AM PST by 2banana (My common ground with terrorists - they want to die for islam and we want to kill them)
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To: Hydroshock

This would put over 100,000 loan officers/mortgage brokers out of business. And it would make it much more difficult for low income borrowers to buy homes. This must be stopped!


4 posted on 11/06/2007 10:26:23 AM PST by Samba
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To: Samba

And not to mention the effect of home values. If you thought your house value was down now just wait.


5 posted on 11/06/2007 10:28:13 AM PST by Hydroshock ("The Constitution should be taken like mountain whiskey -- undiluted and untaxed." - Sam Ervin)
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To: Hydroshock
Pass the bill and all future mortgage loans will cease. There is nothing to compel the Mortgage Lenders to lend to anyone.


6 posted on 11/06/2007 10:30:22 AM PST by darkwing104 (Let's get dangerous)
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To: Hydroshock

From the way these financial companies have been run, the possession of an advanced business or finance degree from a prestigious university gives its possessor the same appreciation for long term consequences as that of a crack whore, but without the whore’s ethics and sense of self preservation.


7 posted on 11/06/2007 10:31:58 AM PST by JeeperFreeper
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To: darkwing104

I know. There needs to be some regulation and a return to sensible banking stanards but this is crazy.


8 posted on 11/06/2007 10:32:08 AM PST by Hydroshock ("The Constitution should be taken like mountain whiskey -- undiluted and untaxed." - Sam Ervin)
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To: 2banana

“You want to kill the mortgage market for years? - get the government involved...”

NO!

You don’t want the government involved.

The government is CAUSING this problem.

A Sarbox for Housing

How to restrict lending to the poor for years to come.

Tuesday, November 6, 2007 12:01 a.m. EST

Throughout the 1980s and ‘90s, Congress prodded, even strong-armed, banks into making more mortgage loans to low-income and minority families. Washington enacted anti-discrimination and community lending laws with penalties against lenders for failing to issue riskier mortgages to homebuyers living in poor neighborhoods or with low down payments and subpar credit ratings. And so it was that the modern subprime mortgage market was born.

Now, and for a variety of reasons, some two million of those loans have gone sour, and the same politicians are searching for villains. Leading the charge is House Financial Services Chairman Barney Frank, who is accusing banks of “predatory lending”—by which he means making loans to the very group of borrowers that Mr. Frank and his colleagues urged banks to serve.

As early as today, Mr. Frank plans to hold a committee vote on his Mortgage Reform and Anti-Predatory Lending Act of 2007, which would impose new rules and financial penalties on subprime lenders, while providing new lawsuit opportunities for distressed borrowers. “People should not be lent money that’s beyond what they can be expected to pay back,” Mr. Frank says. Now, there’s an idea. Why didn’t the bankers think of that?

Mr. Frank’s proposal is a trial lawyer’s dream. It would forbid banks from signing up borrowers for “overly expensive loans”; require banks to make sure that the consumer has a “reasonable ability to repay the loan”; and insist that loans must be “solely in the best interest of the consumer.” This kind of murky language would invite litigation from every borrower who misses a payment. If it becomes law we can expect to see billboards reading: “Behind on your mortgage? For relief, call 1-800-Sue-Your-Banker.”

Also for the first time, banks that securitize mortgages would be made “explicitly liable for violations of lending laws.” This is a version of secondary liability that holds the bundlers and resellers of mortgages responsible for the sins of the original lenders. The reselling of mortgages has been a boon both to housing liquidity and risk diversification. So to the extent the Frank bill adds a new risk element to securitizing subprime loans—and it surely will—the main losers will be subprime borrowers who will pay higher rates if they can get a loan at all.

...

But for all the demonizing, about 80% of even subprime loans are being repaid on time and another 10% are only 30 days behind. Most of these new homeowners are low-income families, often minorities, who would otherwise not have qualified for a mortgage. In the name of consumer protection, Mr. Frank’s legislation will ensure that far fewer of these loans are issued in the future.

http://www.opinionjournal.com/editor...l?id=110010826


9 posted on 11/06/2007 10:32:56 AM PST by nmh (Intelligent people recognize Intelligent Design (God) .)
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To: JeeperFreeper

That is truly insulting, to the crack whore.


10 posted on 11/06/2007 10:34:40 AM PST by Hydroshock ("The Constitution should be taken like mountain whiskey -- undiluted and untaxed." - Sam Ervin)
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To: darkwing104

“Pass the bill and all future mortgage loans will cease. There is nothing to compel the Mortgage Lenders to lend to anyone.”

That’s bunk!

We can’t have the government bailing our IRRESPONSIBLE people. Make mortgage companies learn the HARD way not to write BAD business. That’s the ONLY way to stop this crap.

A Sarbox for Housing


A Sarbox for Housing

How to restrict lending to the poor for years to come.

Tuesday, November 6, 2007 12:01 a.m. EST

Throughout the 1980s and ‘90s, Congress prodded, even strong-armed, banks into making more mortgage loans to low-income and minority families. Washington enacted anti-discrimination and community lending laws with penalties against lenders for failing to issue riskier mortgages to homebuyers living in poor neighborhoods or with low down payments and subpar credit ratings. And so it was that the modern subprime mortgage market was born.

Now, and for a variety of reasons, some two million of those loans have gone sour, and the same politicians are searching for villains. Leading the charge is House Financial Services Chairman Barney Frank, who is accusing banks of “predatory lending”—by which he means making loans to the very group of borrowers that Mr. Frank and his colleagues urged banks to serve.

As early as today, Mr. Frank plans to hold a committee vote on his Mortgage Reform and Anti-Predatory Lending Act of 2007, which would impose new rules and financial penalties on subprime lenders, while providing new lawsuit opportunities for distressed borrowers. “People should not be lent money that’s beyond what they can be expected to pay back,” Mr. Frank says. Now, there’s an idea. Why didn’t the bankers think of that?

Mr. Frank’s proposal is a trial lawyer’s dream. It would forbid banks from signing up borrowers for “overly expensive loans”; require banks to make sure that the consumer has a “reasonable ability to repay the loan”; and insist that loans must be “solely in the best interest of the consumer.” This kind of murky language would invite litigation from every borrower who misses a payment. If it becomes law we can expect to see billboards reading: “Behind on your mortgage? For relief, call 1-800-Sue-Your-Banker.”

Also for the first time, banks that securitize mortgages would be made “explicitly liable for violations of lending laws.” This is a version of secondary liability that holds the bundlers and resellers of mortgages responsible for the sins of the original lenders. The reselling of mortgages has been a boon both to housing liquidity and risk diversification. So to the extent the Frank bill adds a new risk element to securitizing subprime loans—and it surely will—the main losers will be subprime borrowers who will pay higher rates if they can get a loan at all.

...

But for all the demonizing, about 80% of even subprime loans are being repaid on time and another 10% are only 30 days behind. Most of these new homeowners are low-income families, often minorities, who would otherwise not have qualified for a mortgage. In the name of consumer protection, Mr. Frank’s legislation will ensure that far fewer of these loans are issued in the future.

http://www.opinionjournal.com/editor...l?id=110010826


11 posted on 11/06/2007 10:34:45 AM PST by nmh (Intelligent people recognize Intelligent Design (God) .)
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To: 2banana

“You want to kill the mortgage market for years? - get the government involved...”

Sorry, I mistook your reply.

It’s an election year ... and all the socialists will flock together to show they “care” and “feel your pain” and dumb people down MORE and more them MORE irresponsible. If need be, let both the mortgage company and the consumer LEARN THE HARD WAY to THINK and not FEEL and be GREEDY living beyond their means.


12 posted on 11/06/2007 10:37:00 AM PST by nmh (Intelligent people recognize Intelligent Design (God) .)
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To: 2banana

I second that. A major cause of the problems we are experiencing today is government.


13 posted on 11/06/2007 10:47:43 AM PST by caisson71
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To: nmh
Its a matter of leading a horse to water...

If the legit lenders has to be forced to cowtow to irresponsible people and risk heavy losses, wheres the incentive? Its much easier to stop all future mortgages. There is nothing to force a lending institutions to lend money beside profit from interests.


14 posted on 11/06/2007 10:57:56 AM PST by darkwing104 (Let's get dangerous)
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To: Hydroshock

Nothing beats causing a problem, and then angrily demanding solutions to the problems your past legislation caused.


15 posted on 11/06/2007 10:58:21 AM PST by Travis McGee (---www.EnemiesForeignAndDomestic.com---)
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To: Hydroshock

Too little . . . Too late . . . ‘Nuff said here on FR.


16 posted on 11/06/2007 11:23:29 AM PST by ex-Texan (Matthew 7: 1 - 6)
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To: Hydroshock
I just heard an interesting rant from a co-worker. It went something like this...

When these clowns get done our children will no longer be able to afford a home, they will be destined to become renters for life. I can't argue with the guy's statement.


17 posted on 11/06/2007 11:30:05 AM PST by darkwing104 (Let's get dangerous)
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To: 2banana
If this is the bill that I have heard of before; it’s truly a bad idea.
It will take large amounts financing out of the housing market, it will make an already bad problem worse.

The dirty little secret right now, is that subprime mortgage products are already gone.

There are some who wish to crash the housing market and our economy; that is a bad idea and will hurt everyone in the nation.

18 posted on 11/06/2007 11:32:45 AM PST by HereInTheHeartland (Sometimes the first duty of intelligent men is the restatement of the obvious. Orwell)
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To: 2banana

“You want to kill the mortgage market for years? - get the government involved...”

Well, the government has been involved for many years. That is what people must realize. Fannie Mae, Freddie Mac, the failure to release up-to-date financial statements for these GOVERNMENT SPONSORED ENTERPRISES, a Federal Reserve System that happily accomodates politicians’ wishes, pressure from government to loosen lending standards for borrowers who have a sketchy credit history, and the list of government involvement goes on and on...


19 posted on 11/06/2007 11:37:16 AM PST by TaxesR2High (Vote Ron Paul in 2008)
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To: Hydroshock
The most important fact about this compromise is that it has significant new safeguards to protect families from abusive lending

Just what I want, government rules to protect me from myself.

20 posted on 11/06/2007 11:59:25 AM PST by Fan of Fiat
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