In response to public outcry and financial market fluctuations, the US government has proposed to review, modify and create laws and regulations affecting the mortgage industry. To help alleviate the current crisis, legislatures have taken measures to regulate the loan process and assist current holders of subprime loans.
The Mortgage Reform & Anti-Predatory Lending Act, H.R. 3915, November 15, 2007
Passed in the House of Representatives the senate needs to approve.
This bill would hold mortgage originators accountable for offering the types of loans that led to the current mortgage crisis. The bill will also reform and provide accountability for consumer mortgage practices, establish licensing and registration requirements for residential mortgage originators, and provide certain minimum standards for consumer mortgage loans.
The FHA Modernization Act, S. 2338, December 2007
Passed in the US Senate the house needs to approve
Allows the FHA more flexibility and improves their capacity to serve the credit needs of subprime borrowers.
Regulation Z (Truth in Lending Act), December 18, 2007
Federal Reserve Board this is a proposed regulations that is not final yet
This regulation protects consumers from deceptive home mortgage lending practices by requiring disclosures about loan terms and costs. For example, lenders are required to state the maximum interest rate in variable-rate contracts.
Mortgage Forgiveness Debt Relief Act of 2007, December 20, 2007
New tax law passed by Congress
This new law gives tax breaks to homeowners who have part or all of their mortgage debt forgiven by a lender. The law may make it easier for a borrower to refinance an existing loan, rather than submit to foreclosure (especially in the case where the current value of the home is less than the mortgage amount).
Hope Now, December 2007
A private alliance encouraged by Dept. of Treasury & HUD
This alliance of private organizations and government agencies counsels homeowners in distress through an outreach program.
California and Arizona have reached agreements with large creditors doing business in their States to voluntarily freeze subprime adjustable-rate mortgages (ARMs) at the initial interest rate for some period in the future. These agreements will slow the rate of foreclosures and allow borrowers more time to refinance while the borrowers continue to make payments based on the initial interest rate.
Seven states recently launched a mortgage broker tracking system that creates a uniform application for mortgage brokers, as well as a database that banking regulators can use to track down brokers who try to work in one state after being banned from another. This program hopes to deter predatory lending practitioners and allow for the tracking of those who continue this practice. 43 more states are expected to participate in the registry by the end of 2009.