Bill To Help Victims Of Subprime Mortgage Loan
Mortgage lenders offer subprime loans to borrowers who are having an unsatisfactory credit history. Now, legislation is all set to provide relief to victims of these sub-prime mortgage loans. According to a bill introduced in the Senate, all the mortgage brokers involved in the sub- prime market would be directed to strictly implement new rules. The bill has been introduced with the objective of protecting borrowers who have defaulted on their loan payments and are now facing the risk of losing their homes due to foreclosure.
As per the proposal, mortgage brokers and originators need to compulsorily assess the repayment capability of the borrower before approving the loan. It also prohibits brokers from persuading borrowers for loans with higher and unaffordable interest rates.
The bill was introduced in the Senate by Sen. Charles Schumer, D-N-Y. He also proposed that around $300 million worth of federal funds must be released for the purpose of supporting community groups. These community groups have been formed with the objective of helping troubled borrowers to avoid foreclosure. Schumer had earlier made a proposal before the Senate in April to release emergency funds.
Sen. Sherrod Brown, D-Ohio and Robert Casey, D-Pa, who supported Sen. Charles Schumer in favor of the bill, have even asked mortgage lenders and bankers to match the funds by two to one. In their opinion, any such initiative from the lenders can protect around 300,000 to 900,000 from getting into the subprime mess and avoid any home foreclosure.
According to Sen. Schumer, the subprime mortgage industry activities are not being scrutinized by the law. There has been a sharp increase in the rate of foreclosures in the recent months. However, the housing market is still reeling under a slump without any rise in the home prices.
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