Major mortgage industry reform may finally come to fruition. Earlier this November, the House Financial Services Committee of the House of Representatives approved a bill that impacts mortgage lenders, mortgage brokers, and consumers throughout the nation. The bill is Congressman Barney Frank’s, D-Mass., answer to predatory mortgage lending and the ensuing subprime mortgage fiasco.
House Financial Services Committee Chairman Frank intends to impose extensive changes on the mortgage loan industry, including minimum standards for approving home loans and new liabilities for those securitizing risky home mortgage loan.
The Mortgage Reform and Anti-predatory Lending Act of 2007 passed with a 45-19 vote, now head to the House for a vote. Once it passes the full house, it would then need to clear the Senate and must be signed by President Bush before becoming law.
The bill hopes to address issues in the mortgage home loan industry that led to the current crises of foreclosures, subprime mortgages, mortgage backed securities, and stronger consumer protections. Frank wants to avoid a future repeat of the recent past, when many mortgage brokers and mortgage lenders needed financial liquidity, risky mortgage-backed securities lost value, decreased credit liquidity in the markets, and increased foreclosures.
However, to many home buyers the current environment is perfect for their needs. Before, many consumers experienced a seller’s market, home prices skyrocketed, leaving many consumers with the inability to afford homes.
Now with the lowering of mortgage rates, lowering of home prices, and availability of excess homes, finally many are able to afford homes. Many have taken advantage of lower interest rates to do mortgage refinance of their adjustable rate mortgages and interest only mortgages.
The positive effects of lower interest rates were reflected with a jump in mortgage applications with 50.2 percent of total mortgage applications in the first week of November were for mortgage refinancing.
The increase in mortgage applications shows that buyers see a huge opportunity in the real estate housing market. Many experts agree while home prices still have room for correction, buyers should take advantage of the lower mortgage rates and lowering home prices.
This is the perfect atmosphere for buyers to negotiate with sellers, as many sellers are investors looking to offload their home investments. These investors can no longer afford to maintain multiple mortgages of multiple investment properties, as they can no longer flip them at the previous pace of the boom housing market.
The bonanza for home buying is just beginning, according to experts. New buyers are leveraging their positions as buyers find bargains. The oversupply of new home inventory, existing home sales, and foreclosures give home buyers plenty of choice when it comes to buying a home.