Could a new mortgage regulatory agency help consumers?

03.29.09
By Nicholas Storie

One group familiar with the inner workings of the mortgage loan industry have offered some new ideas to Congress on how to help better manage the lending sector and protect consumers.

The Mortgage Bankers Association has called on Congress to re-examine the mortgage lending industry and create a new governing body called the Federal Mortgage Regulatory Agency.

The group's proposed Mortgage Improvement and Regulation Act would set new lending standards for the industry and the newly formed regulatory body would be responsible for oversight.

"Under our proposal, we are calling for one federal regulator to implement the standards and oversee all mortgage bankers and brokers," said John A. Courson, president of MBA.

"That regulator would work with the appropriate federal and state regulatory bodies to effectively enforce these tough new requirements," he said.

The hope is that individuals and households visiting mortgage brokers to obtain a home loan or refinance an existing mortgage would receive a clear explanation of the mortgage product and how it works.

The MBA hopes that new lending standards will also lead to an improved loan approval process.

The government, on the other hand, is trying to empower current and prospective homeowners to take steps to better understand the terms of their mortgage loan and how to go about refinancing it on their own.

The recently launched MakingHomeAffordable.gov not only helps homeowners determine if they are eligible for home loan modification or refinancing, but also offers a number of educational tools.

Individuals and households can log on to learn more about the terms and conditions of their mortgage and what all the jargon used by mortgage bankers really means.

Homeowners can also search for events in their community where they might be able to learn more about foreclosure prevention or connect with a housing counselor.

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New resources may help homeowners