Mortgage lenders submit to congressional mortgage loan scanner

Will Congress come to the rescue of consumers to initiate home loan mortgage lender reform? Can. The Democratic-led Congress may introduce legislation to implement tough measures to curb abuses within the mortgage industry.

The mortgage industry includes not only mortgage lenders, mortgage brokers, but also home builders who own mortgage companies, Wall Street, and other investors in mortgage securities. If Congress implements tough measures, it will protect future consumers from being exploited. However, it may have a side effect in that it may protect buyers of mortgage-backed securities. The recent past has seen absolute chaos in the market. Countrywide Financial’s second-quarter earnings fell, leading to a plunge in stock prices to a 52-week low on July 24, 2007. Its second-quarter net income fell to $485.1 million from $ 722.2 million, a year ago with revenue falling 15% to $2.55 billion. .

This week, American Home Mortgage, a large national mortgage lender, announced that it may not be able to finance the current inventory of home loans in excess of $300 million, causing its stock value to plummet by a 90%. But the subprime debacle is hitting even prime loan lenders and borrowers.

Wall Street is also reeling from rising foreclosures, housing oversupply, subprime mortgages, defaults and more. Yet Wall Street is complicit along with homebuilders and mortgage lenders in creating this problem.

Beazer Homes, one of many homebuilders that started or grew its home-lending business to make home buying easier. Now, however, claims are emerging from former homeowners who have defaulted on their mortgages that some builders inflated their income or altered material facts in mortgage applications to get them approved. In order to sell homes, many financially unqualified people were approved for mortgages and other home loans, such as mortgage refinancing.

The housing market boom of the last five years was due to many different factors. Banks, mortgage companies and home builders relaxed their credit standards and flooded the market with home loans, along with loans to people with questionable credit. Unlike before, adjustable rate mortgages were bound to add to your bottom line. The folks on Wall Street fueled this reckless home lending behavior by continuing to buy huge amounts of home loans to convert into securities. Many of these mortgage-backed securities contained risky subprime mortgages.

Now that the housing bubble has burst, rising foreclosure rates, oversupply of homes, rising mortgage rates, lower demand for home purchases, and negative spillover effects on the economy are leading to The government is taking a closer look at the role of mortgage lenders, home builders, and Wall Street.

Congress wants to rein in the credit tactics of the Wild West by imposing strict lending guidelines. But that may not be necessary if the Federal Reserve recommends new consumer protection rules this year. Therefore, Congress may not need to act if the Federal Reserve restricts deceptive lending practices among all lenders. It is to be expected that national lending standards will need to replace the various state standards because the mortgage investment market is national.