Bachus Bill Offers Foreclosure Solutions
At the turn of the 20th century, Upton Sinclair wrote his landmark novel The Jungle, detailing the horrors practiced by the meatpacking industry. The government took notice and created the FDA, an organization that now regulates and monitors food and drug products in the United States.
Though no such novel exposing the practices of the credit industry has been written, the current foreclosure crisis and rash of bankruptcies seem to be serving the same purpose. Government leaders are finally taking action to change the conditions that allowed so many Americans to accumulate so much debt.
Senator Spencer Bachus, a Republican from Alabama, has introduced the Fair Mortgage Practices Act, reportedly the result of 16 months of effort. The legislation proposes "uniform standards" for mortgage originators, which will mean easier monitoring and enforcement of regulations nationwide.
Specifically, Bachus' bill includes the following items:
- A national registration/licensing system for all mortgage originators
- A demand for simplified, clarified borrower disclosure
- A push for lender credit checking to ensure borrowers are getting appropriate, affordable loans
- Increased support to homeowner counseling programs
- Limits for fees and penalties on hybrid ARMs
- Requirement of escrow accounts for subprime loans
- Increased protection from mortgage fraud and schemes
- Higher standards for appraisal integrity
The bill reflects Bachus' belief that subprime lending can still benefit some borrowers, but that the abuses in the industry need to be stopped. He stated in a press release that maintaining borrowers' access to credit is "critically important" in the home-buying process.
By clamping down on predatory lending, fighting the abuses in the subprime market, and ensuring that consumers are able to make better-informed decisions, Bachus reportedly believes his bill will help fight future foreclosures.
The Birmingham News emphasizes the importance of Bachus' alignment with liberal democratic senator Barney Frank, who shares Bachus' views on predatory and subprime lending. According to reports, Bachus' own child ran up serious credit card bills in college, proving once again that no one is immune to the potentially dangerous world of plastic credit.
Bachus cited statistics that showed credit card debt for families at levels three times what they were 30 years ago, the News discloses. The senator has reportedly taken these numbers as more proof that his legislation is badly needed by American families.
In fact, the only group that really stands to lose from Bachus' bill is the credit industry, a part of the "big business" world Bachus usually supports, sources say. But he believes firmly that his introduced legislation is crucial for the financial health of the American people, and apparently hopes that the unity of the Democrats and Republicans will help bring about serious change.