THIS BILL WOULD REFORM HOME MORTGAGE INDUSTRY

Bill would reform home mortgage industryLegislators on Capitol Hill are preparing to take up a comprehensive plan that would fundamentally reform the home mortgage market, starting this year. Had the proposed rules and standards been in place earlier in the decade, say congressional supporters, they could have eliminated much of the funny-money loans, slipshod underwriting and Wall Street abuses that distorted the market from 2002 through 2006. The boom wouldn't have been as big, and the bust might not have happened.The Mortgage Reform and Anti-Predatory Lending Act of 2009 (H.R. 1728) is expected to move quickly through the House this month and go to the Senate by May. The odds of passage in some form are high, according to banking and housing industry lobbyists. Here's what the legislation would do:* Ban all fees paid to loan officers that are tied to the interest rate of the mortgage or the type of the loan. The new bill would prohibit any compensation -- "direct or indirect" -- that is tied to the rate or terms of the mortgage. The bill does permit homebuyers or refinancers to opt for a slightly higher note rate to finance closing costs.* Create mandatory minimum national quality standards for all mortgages. Allow borrowers who are put into mortgages that violate the new law to seek legal redress through cancellation of the loan contract, refund of all payments and fees and compensation for legal costs.

Source: Los Angeles Times; Distributed by the Washington Post Writers Group