The measures are designed to keep more people from sinking into the current mortgage crisis, where prospective home owners with shaky credit got mortgages with low interest rates only to see the rates rise and bring monthly mortgages up to prices they cannot afford.
More than 2 million adjustable rate mortgages are scheduled to reset by the end of 2008.
Included in the legislation are provisions that would:
• Create a nationwide licensing system for mortgage brokers and bank loan officers called the Nationwide Mortgage Licensing System and Registry.
• Ban lenders from making loans that borrowers don't have the ability to repay;
• Prohibit lenders from steering homeowners into refinanced mortgages that don't provide any benefit and create fines of triple the broker fee and costs;
• Make Wall Street banks that package mortgage securities into investments liable for violations of lending laws;
• Prohibit excessive fees for payoff information or late payments, the financing of points and fees and practices that increase the risk of foreclosure like balloon payments and encouraging borrowers to default.