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Mortgage Industry Less Than Enthusiastic About Housing Bill Provisions
Published: May 09, 2008
Washington, D.C.--The mortgage industry is expressing concern about one of the main measures in the housing bill that was passed by the House Thursday, The Wall Street Journal reports.
Designed to reduce foreclosures, the provision suggests mortgage companies cut the principal on some loans, in exchange for the Federal Housing Administration paying off the loan and giving the homeowner a new mortgage.
According to the Congressional Budget Office, the voluntary proposal could help 500,000 borrowers.
However, trade groups representing mortgage companies and investors disagree.
"I don't believe this would be a tool that would be used significantly," said Tom Deutsch, deputy executive director of the American Securitization Forum, which represents mortgage-servicing companies and investors who buy mortgages that have been packaged into securities.
If home prices continue to plummet, mortgage companies are more likely to opt into the program, according to the Journal.
