Watered-down mortgage reform

Source: New York Times (Free Registration)

What a difference a day makes. Just yesterday, this page praised the House Financial Services Committee for producing an exemplary bill, the Mortgage Reform and Antipredatory Lending Act of 2007, and urged its members to make only a few improvements before passing the measure. When they meet today, the committee chairman, Barney Frank, is prepared to offer an amendment that will make the weakest part of the bill even weaker. Under the bill as currently drafted, borrowers have only limited ability to pursue legal claims against Wall Street investment banks and other investors, two groups that have profited greatly from mortgage lending, which turned out to be abusive. The lack of redress is a significant flaw. It would leave many aggrieved borrowers without adequate relief and would give the biggest players in the mortgage market insufficient incentive to avoid buying abusive loans. Mr. Frank’s proposed change would not improve borrowers’ ability to pursue legal remedies against Wall Street under federal law. In addition, it would prevent borrowers from seeking redress on the state level, which sometimes offers stronger protection than federal law.

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