Congress seeks to overhaul lending practices

Congress is pushing for legislation designed to curb abusive lending practices that lured people into ill-suited loans prone to
foreclosure, the Washington Post reported. The main goal is to align the financial incentives of lenders with the financial well-being of consumers. The provisions would change the way loan officers are compensated and hold lenders responsible for their loans, by requiring them to extend mortgages only to borrowers who can repay them and limit penalties for those who pay off their loans early. “It would have been unthinkable to get through financial reform without addressing the mortgage market because this is why we are in the mess we’re in,” said Julia Gordon, senior policy counsel at the Center for
Responsible Lending, which supports the provisions. Advocates for the mortgage industry, who have resisted federal regulation in the past, are likely to object, but the industry has accepted that some changes are inevitable. The measures are included in both the House and Senate versions of the financial overhaul legislation, and a final bill is scheduled to reach President Barack Obama for his signature this summer. [Washington Post]