Realtors support mortgage lending reform

WASHINGTON – April 24, 2009 – At a House Financial Services Committee hearing, NAR President Charles McMillan testified that the mortgage lending system needs reform to restore consumer confidence and the housing market. He said that the recently introduced “Mortgage Reform and Anti-Predatory Lending Act of 2009,” H.R. 1728 contains many of the reforms NAR wants, but McMillan also cautioned against overregulation.

“Historically low mortgage rates and a significant tax credit for first-time home buyers have begun to bring people back to the housing market,” McMillan said. “However … we must strike an appropriate balance between safeguarding consumers and making sure they have access to mortgages at a reasonable cost. Undue regulation of the mortgage market could be as harmful to consumers as the lack of regulation that led to irresponsible lending and other abuses.”

NAR believes the current definition of mortgage originator as “any person who assists a consumer in obtaining or applying to obtain a residential mortgage loan” is too broad, since Realtors, as part of their normal level of service, provide advice, counsel and assistance across all aspects of the real estate transaction. In addition, NAR supports the safe harbor provisions in the legislation; but as written, the association thinks they may be too narrow.

“The safe harbor should include more products than 30-year fixed-rate mortgages. We need to protect more home buyers from risky lending products, and that requires some flexibility in financing terms,” McMillan said.

NAR supports regulations that require subprime mortgage lenders to create appropriate escrow accounts. NAR also believes that a strong and independent appraisal industry is vital to restoring faith in the mortgage origination process.

“We applaud the efforts of this committee and the authors of H.R. 1728,” McMillan said. “This bill is a major step in the right direction and we look forward to working with Congress to adjust and improve the legislation to make it even more meaningful and safe for all consumers.”

© 2009 FLORIDA ASSOCIATION OF REALTORS®

Questions, comments or suggestions on this article? Have a news tip? Send a letter to the editor to: Newseditor@floridarealtors.org.