White House Objects to Parts Of Mortgage-Reform Bill
Thursday, November 15, 2007
The White House released a brief statement yesterday opposing key parts of legislation aimed at curbing abusive mortgage-lending practices that have fueled a jump in foreclosures.
The legislation, which is scheduled for a vote on the House floor today, was introduced by Rep. Barney Frank (D-Mass.) with bipartisan support. But the White House opposed provisions that have also been criticized by banking groups.
The Bush administration singled out a provision that would allow some borrowers to sue Wall Street firms that repackage loans as securities and ask to rescind mortgages that violate the principles in the legislation.
The White House also took issue with what it called "subjective" rules that would be imposed on lenders and mortgage brokers. The legislation would require that loans be made only to borrowers who can be reasonably expected to repay them. The mortgage industry has said that without clear, quantifiable standards that can be applied to every borrower, this requirement will lead to confusion and litigation and make it more difficult to get loans.
"Any legislation addressing mortgage origination should be mindful of the need to strike the right balance between consumer protection and the consumer's ability to access credit," the White House said.
Frank, who heads the House panel with jurisdiction over the mortgage industry, declined to comment about the administration's statement. His spokesman said Frank is hopeful that the House will approve the bill.
Rep. Brad Miller (D-N.C.), a principal co-sponsor of the legislation, said he was disappointed that the administration "has not had squat to say about this bill" until so late in the process.
"Now the administration announces a long list of criticisms and demands that are a rote recitation of the worst actors in a crooked business," Miller said. "They have had nothing constructive to say about this process for seven years."
The Senate has yet to introduce a companion bill, though Sen. Christopher J. Dodd (D-Conn.) has said he is crafting a proposal.
In its statement, the White House supported provisions of the bill that call for simpler loan disclosures to borrowers, and better training and oversight of loan originators. The White House said, however, that it has launched regulatory efforts to address the same issues.
The administration also said a national standard should be set for rules that govern mortgage lending. That's another provision the mortgage industry backs. The Frank bill requires only a baseline standard that states could supplement.