Perhaps they saw the writing on the wall. The Mortgage Bankers Association is calling for federal regulation of the mortgage lending industry. And not only do they want it, they’re offering bullet points for what Congress should include in the legislation!
Is it a conflict of interest? MBA is probably not the first industry group to propose the legislation to regulate itself but it seems kind of late in the game.
MBA announced that today it sent a letter to the House Financial Services and Senate Banking committees. In the letter the group outlines key points it would like included in the legislation.
- Create a new federal regulator – the Federal Mortgage Regulatory Agency.
- Create a new national lending standard, including:
- Many of the recently promulgated HOEPA regulations, including those requiring a determination of a borrower’s ability to repay, documentation of income and assets, limits on prepayment penalties and establishment of escrow accounts for borrowers’ tax and insurance payments;
- Improvements to the mortgage origination, servicing and appraisal processes some of which had been included in H.R. 3915 (which passed the House of Representatives in 2007);
- A new duty of care for mortgage bankers and mortgage brokers to assure that consumers get the facts they need to know about the loan options available and the costs of their loan transaction, including compensation to the mortgage broker; and
- A requirement that a borrower affirmatively opt-in, in writing, to a nontraditional mortgage product.
MBA wants federal legislation because each state has its own regulatory structure presently and that leads to confusion, it claims. MBA states that the proposal will help borrowers.
As part of MBA’s proposed Mortgage Improvement and Regulation Act, HUD and the Federal Reserve would be required to work together in consultation with the new regulator to develop greatly simplified consumer disclosure forms, including combining Real Estate Settlement Procedures Act (RESPA) and Truth in Lending Act (TILA) disclosures to help consumers better navigate the mortgage process. Additionally, MIRA would increase resources for investigating and prosecuting mortgage fraud and establish a national financial literacy and counseling program. As part of that program, MBA suggests there should be pre-purchase counseling required on certain mortgage products, primarily for first-time homebuyers.
For more information visit, http://www.mortgagebankers.org/MIRA.
March 24, 2009.