House Approves Legislation to Ease Rules on Home Loans

Photo via Wikimedia Commons.
Photo via Wikimedia Commons.

 

The House on Tuesday overwhelmingly adopted legislation to ease some mortgage lending requirements of the sweeping 2010 law reining in banks and Wall Street as the Republican majority continues its assault on the so-called Dodd-Frank law enacted after the financial crisis.

The House first voted 263-162 on a bill to ease some curbs on lending for mobile and modular homes. Lawmakers then voted 286-140 for a second measure that would ease restrictions aimed at making sure consumers can repay their loans — but which bill sponsors say has had the effect of making it more difficult for some prospective borrowers to obtain credit.

The first vote fell short of the two-thirds that would be required to overcome a veto threat issued by President Barack Obama on Monday. The second measure garnered the two-thirds vote necessary to override a veto.

In threatening a veto, the White House had warned that the bills would permit borrowers to be “steered” into higher-cost loans.

Home mortgages were a flashpoint of the 2008 financial crisis that brought on the Great Recession. Ahead of the crisis, banks sold to investors bundles of risky high-interest mortgages. Millions of home borrowers ended up defaulting on the loans when the interest rates spiked and the housing market bubble burst in 2007. The value of the mortgage securities held by banks and other investors plummeted.

Republican lawmakers pushing the legislation say it would provide relief from regulatory overreach for low- and moderate-income Americans looking to buy a home.

“We have struggling constituents who want to own that first home, who want a break on their (mortgage) closing costs,” Rep. Jeb Hensarling of Texas, chairman of the House Financial Services Committee, said at a news conference on Tuesday. Read More

Chris Letares
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