Congress reached an agreement today on the terms of the long-debated
finance reform bill, which could have wide-ranging implications for the mortgage industry, if the bill is approved by a vote, according to the New York Times. Analysts expect the congressional vote to take place in the coming days. Under the
terms of the bill, mortgage lenders would be required to look more closely at borrowers’ qualifications, making mandatory checks on their
income and assets before granting a loan. Other rules include a ban on payment penalties for
people with adjustable rate mortgages. Mortgage brokers and bank
employees will no longer be able to earn bonuses based on the type of
loan they issue, in the hopes that this will eliminate any incentive
to push high-interest loans on borrowers to inflate bank profits.
According to Julia Gordon, senior policy counsel for the Center for
Responsible Lending, there will also be a cap limiting mortgage
origination fees to 3 percent of the loan, with exceptions for
required upfront mortgage insurance premiums. [NYT]
Finance reform bill will affect mortgages
