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Daily Real Estate News | September 14, 2007
Credit Crunch Likely to Reform Mortgage Industry
America's previous stock-market crashes and corporate accounting scandals have spawned new policy to deal with the fallout from these crises and prevent them from recurring, and the current mortgage-lending debacle is likely to undergo a similar process.
It remains to be seen, however, what path regulators will choose to fix problems now plaguing the industry — which was hamstrung by a combination of loose lending criteria, high risk in the mortgage-backed securities market as well as credit ratings that failed to reflect that risk, and steep foreclosures.
Now, some are looking at tighter oversight of mortgage brokers — such as imposing licensing requirements and greater accountability and transparency — as a response. Rep. Christopher Murphy (D-Conn.) and Sen. Charles Schumer (D-N.Y.) have introduced measures in Congress along those lines.
Analysts say the upheaval in the mortgage sector also could trigger new bank regulation, enhanced Truth-in-Lending rules, and policy shifts at the Federal Reserve.
Source: Christian Science Monitor, Mark Trumbull (09/14/07)
© Copyright 2007 Information Inc.
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