Industry balks at housing bill

Mortgage industry and business groups are urging lawmakers to drop portions of a housing bill they say would be too restrictive on lenders.

Six trade groups Tuesday told lawmakers shepherding a comprehensive package of housing legislation through Congress that the bill would impose excessively strict standards on lenders, requiring them to determine what kind of loan was best for each borrower.

That standard would expose lenders to potential lawsuits and force them “to reduce the number and type of products to consumers,” according to a letter written by the Mortgage Bankers Assn., U.S. Chamber of Commerce and other groups to Sens. Christopher J. Dodd (D-Conn.) and Richard C. Shelby (R-Ala.), the two senior members of the Senate Banking Committee.

The letter also criticized a portion of the bill that would create a nationwide licensing system for mortgage brokers and loan officers. The groups say federal regulators should oversee the system rather than the Conference of State Bank Supervisors and the American Assn. of Residential Mortgage Regulators.

The banking panel passed a version of the bill last month; a full Senate vote was expected as soon as this week.

Dodd said in a statement that the bill “takes important steps toward restoring safety and stability to the housing markets.”

A Dodd spokeswoman wasn’t immediately able to comment on the industry’s criticism. A Shelby spokesman declined to comment.

Also signing the letter were the American Financial Services Assn., the Consumer Bankers Assn., the Consumer Mortgage Coalition and the Financial Services Roundtable.