Will low and medium income families be able to qualify for home loans under this new bill?
November 14, 2007
H.R. 3915 Would Impose New Burdens and Limits on Moderate Income Borrowers
by Ronald D. Utt, Ph.D.
The Manager’s Amendment to the Mortgage Reform and Anti-Predatory Lending Act of 2007 (H.R. 3915) was reported out of the House Financial Services Committee earlier this month and is now before the full House for consideration. Originally crafted for the purpose of addressing the many flaws in the mortgage market that led to the subprime mortgage turmoil, the current bill would encourage lenders to limit their lending to only the very best credit risks. This would put individuals of moderate incomes, imperfect credit histories, and limited wealth at an even greater disadvantage, leading to a decline in the homeownership rate, now at record levels. Among the victims of this mandatory credit quality cleansing would be members of some ethnic minority groups whose current homeownership rates are today only slightly better than the homeownership rate for the nation as a whole in 1890.