U.S. Senate has been working for a long time on a wide-ranging housing legislation that should spell a lot of relief to the battered mortgage industry. Their intentions are certainly sincere, but sometimes they just get too eager to find solutions, hoping to fix everything in a matter of months. Which of course is unrealistic. And they also tend to listen to people who call themselves experts when they really aren't. They are just lobbyists representing a segment of the market that is looking to benefit from the changes.
The latest draft now working its way through the U.S. Senate has energized several home loan trade groups to protest a couple of items on it. One of them would require mortgage lenders to essentially decide what type of a loan program is best suited for the borrower. That clearly goes too far. The originator's role generally is to consult with the client and explain in adequate detail different products and what their advantages and drawbacks are. The final call still ought to rest on the borrower's shoulders. He has to take responsibility for his financial actions and no on else. If the law passes, mortgage originators can start looking for competent legal advice as some clients will end up in foreclosure and blame them for it.
The other issue is about the national licensing system for mortgage brokers and loan originators. The trade groups would like to see the program run by the federal government and not by the current entities, the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators, who have been working for years on a new setup. For it to be truly meaningful and properly enforceable, it should be under the federal umbrella. It would then be one streamlined set of rules and no more. Easy enough.
The trade groups voicing their concerns are the Mortgage Bankers Association, U.S. Chamber of Commerce, the Financial Services Roundtable, The Consumer Mortgage Coalition, the American Financial Services Association and the Consumer Bankers Association. Some seriously influential players among them.