Washington, DC – Lenders would be legally liable when brokers and appraisers push consumers to take mortgages they can’t afford, under a bill introduced by Sen. Chuck Schumer.
“We want to make it harder for irresponsible brokers and non-bank lenders to sell mortgages that are designed to fail the homeowner and result in foreclosure,” he said.
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The measure also seeks contributions from banks to a foreclo-sure-prevention fund.
Schumer, who sits on the Senate Banking Committee, said he would request $300 million in emergency funds for community housing groups to help consumers re-finance loans if they can’t afford rising monthly payments. A two-tone match from mortgage lenders would help keep 900,000 borrowers in their homes, Schumer said.
This measure is the first in Congress to propose immediate relief to subprime borrowers, who typically have weak credit ratings or high levels of debt. [Bloomberg News]