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I am excerpting out a paragraph of Desmond Lachman’s article on the mortgage industry legislation that is before Congress right now from a non real estate person. Please read the article as it explains why this is bad legislation from an economical point of view, not just from a mortgage brokers perspective.

Barney Frank’s recently introduced mortgage reform bill demonstrates yet again Congress’ penchant for indulging in regulatory over-reaction to crises without addressing their underlying causes. Sadly, it also underlines how little Congress seems to have learned about the costs of past excessive market regulation. This is particularly disappointing coming as soon as it does after the Sarbanes-Oxley fiasco, which was Congress’ costly knee jerk reaction to the WorldCom and Enron crises.
One can hardly take issue with the stated motivation of Mr. Frank’s mortgage reform proposal. After all, who could seriously object to legislation that purportedly aims “to combat abuses in the mortgage lending market and to provide basic protection to mortgage consumers and investors”? This is especially the case against the backdrop of US foreclosures now set to top a staggering 2 million homes in 2008. It is also the case considering that global financial markets are still reeling as a result of ever-mounting losses on a mountain of ill-advised sub-prime lending.

Read the rest at TCS Daily - The Wrong Path to Sub-Prime Reform.

Related posts:

1. Mortgage Reform Bill Moving Through Ohio Legislature
2. President Bush Announces Plan to Aid Mortgage Holders in Trouble
3. House Finance Services Committee Passes Mortgage “Reform” Bill
4. IndyMac Changing Course, 90 Percent of Loans Now Prime
5. Watch Out Below - Here Comes Barney Frank and the Feds To Fix The Mortgage Business