Senate President Therese Murray today announced that the Senate will take up a comprehensive bill tomorrow designed to address the current foreclosure/subprime lending crisis. The bill is will provide for more state oversight of the mostly out-of-state mortgage companies that have been peddling high-cost, exotic mortgage products. It also calls for the state to match employer contributions to housing benefits that they offer to employees. The bill will also license loan officers (you will probably read tomorrow that it licenses mortgage brokers but we have been doing that for 15 years – this bill extends licensing to the little guys – the on the ground loan officers). This is a good bill that puts Massachusetts in the lead in responding to the outrageous and deceptive lending practices of subprime mortgage companies – without costing taxpayers a nickel or bailing out the companies that ripped people off. Senate President Murray deserves credit for stepping forward (as do Senators Tucker, Buoniconti, Panagiotakos, Wilkerson, and Tarr)to move this bill now before the summer recess. You can read the bill here.
This post deserves a comment and the legislative response to foreclosures and subprime lending deserves much better coverage than it’s been getting.
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The mortgage industry (aside from banks, who have generally acted responsibly) has dodged any effective state or federal oversight — until now. At a Financial Services Committee hearing a few weeks ago the mortgage bankers association couldn’t cite a single specific reason why proposed state oversight of their lending practices was unreasonable. The House Chairman, Ron Mariano, was visibly exasperated.
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In Massachusetts we know better than any other state how to work with banks to expand mortgage opportunities without abandoning good business judgment, without causing high foreclosure rates, and without keeping lenders from making a reasonable profit. That success was only possible because of federal and state laws that require banks to responsibly address the credit needs in communities they serve. It’s time that forward-looking approach be extended to the entire mortgage industry, not just to banks which now represent only 20% of the market. I think the House leadership understands that too, and I’m hopeful that we’ll see a strong House bill soon.