This week will be a busy one for lawmakers on Capitol Hill, who plan two hearings that could shape the federal government’s response to rising delinquencies and foreclosures among subprime mortgage borrowers.

At a hearing Tuesday, the House Committee on Financial Services will consider recommendations in a recent report by the Congressional Joint Economic Committee, including increased support for local foreclosure programs and strengthening Federal Housing Authority mortgage insurance programs.

The report also recommended instituting a federal anti-predatory-lending law, tougher loan disclosure requirements and suitability standards requiring borrowers to demonstrate their ability to repay mortgage loans.

Lending industry groups including the Mortgage Bankers Association say they support stronger foreclosure prevention and FHA insurance programs, but oppose some of the proposed restrictions on lenders such as suitability standards.

The House Finance Committee will also hold a hearing Thursday on proposals to modernize the FHA.

A bill sponsored by Democrats Barney Frank and Maxine Waters, HR 1852, would increase FHA loan limits in high-cost areas such as California, New York and Massachusetts; authorize no- or low-down-payment FHA-backed loans to compete with private sector loans; permit FHA to underwrite loans to borrowers with higher credit risk than currently allowed; and eliminate a volume cap on FHA reverse mortgage loans.

The latest version of the bill scales back a proposal to raise fees in a bill approved by the House last year. Borrowers making down payments would pay a maximum upfront fee of 2.25 percent, instead of 3 percent, and the maximum annual fees would be .55 percent instead of 2 percent.

The reduced fees would cut closing costs on a $300,000 by $2,250, and reduce annual fees by $20,000 over five years.

The bill would give the Department of Housing and Urban Development the authority to require counseling for riskier borrowers, and require disclosures spelling out the costs and risks of zero-down and lower-down-payment loans.

***

What’s your opinion? Send your Letter to the Editor to opinion@inman.com.

Show Comments Hide Comments
Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription
×