WASHINGTON – With a million foreclosures expected over the next 12 months, the House voted Thursday for a bill to crack down on subprime lenders, but will create new standards for credit unions and other bystanders in the current mortgage meltdown.
The bill establishes new curbs on subprime loans by restricting prepayment penalties and barring the financing of fees and points and other practices that increase the risk of foreclosure. But it will also require licensing for all lenders and create a national registry, much like the one in existence for securities brokers; it will establish liability for loans sold by originators on the secondary market; and require all lenders to determine a borrower’s ability to repay the loan before approving a mortgage.
"What we have today is a bill that cannot undo what happened, but it makes it much less likely it will happen in the future," said Rep. Barney Frank, the Massachusetts Democrat who chairs the House Financial Services Committee and chief sponsor of the measure.
The bill now goes to the Senate, where similar legislation has been stalled for weeks.
