Released: May 22, 2007

Bankers groups back certain mortgage reforms

Source: Alan Zibel, Associated Press [USA Today]

Banking industry trade groups endorsed mortgage reform principles Monday as the troubled market for high-risk home loans worsens and Congress ponders whether to intervene. The statement from five industry groups says lenders are already stepping up efforts to assist borrowers who face default or foreclosure and emphasizes that lenders are voluntarily tightening loan standards.

Any legislation or new regulations should focus on lenders only being permitted to issue high-risk home loans if they “reasonably believe” at the time the loan is made that borrowers have the ability to repay, the statement said.

Mortgage terms should be “clearly disclosed” to consumers, and estimates of monthly payments that could quickly jump in later years should be made clearer, the groups said.

The statement came from Financial Services Roundtable, American Bankers Association, Mortgage Bankers Association, Consumer Bankers Association and America’s Community Bankers.

Read Full Article: Bankers groups back certain mortgage reforms