House passes tough subprime lending law

A new bill has been passed recently which aims at protecting borrowers like you from abusive home loans. But the journey was not easy for it as it got resistance in the House and would see the same in the Senate. The White House also criticized the bill along with the mortgage industry.

It was passed by a 291-127 vote, among which votes of 64 House Republicans are also there. Others opposed it saying that it is a overreaction to the prevailing conditions in the real estate market. According to them the lending practices are improving in the country and there is no need of such a hard law.

The opposition also claimed that this bill will limit the amount of credit available to the homebuyers. Mortgage Bankers Associations, American bankers Association and other banking and mortgage companies and organizations clearly showed their dissatisfaction.

Now, what is there in the bill?
According to the bill, lenders will not be able to provide loans to the borrowers that the borrower cannot pay. There will be a licensing system that will work in the whole nation. This system will control the mortgage brokers. Once the law is enacted, the Wall Street banks,  which offer mortgage securities into investments will become violators of law.

Those who are for the change, say that this could have helped in curbing the recent mayhem in the real estate market. They also believe that predatory sub prime loans become un payable home loans.