Federal Mortgage Reform Unlikely in 2007

Miller is confident that a bill he and his colleagues plan to introduce will pass the House quickly. The bill will be modeled after consumer protection laws in states like North Carolina and New Jersey, where reforms aren't drying up credit, he says.

The bill likely faces an uncertain future in the Senate. And though Sen. Charles Schumer, D-N.Y., wants $300 million of government money _ matched dollar-for-dollar by mortgage lenders _ to be channeled to community groups that help distressed homeowners avoid foreclosure, his proposal has gained little traction.

On the regulatory front, the Fed has scheduled a June 14 hearing about whether to take action under a 1994 law that gives it authority over deceptive mortgage practices by any lender, not just federally regulated banks.

Rep. Carolyn Maloney, a New York Democrat who heads a House subcommittee that oversees financial institutions and consumer credit, wants the central bank to step in.

Dodd wants the Fed to go after lenders that made loans without requiring borrowers to set aside tax and insurance payments. He also wants limits on loans made without income verification, dubbed "liar loans."

In March, five federal agencies that regulate banks, thrifts and credit unions proposed guidelines requiring stricter evaluations of a borrower's ability to repay, among other recommendations.

The guidelines _ which apply only to federally regulated banks _ should be completed this month, Sheila Bair, chairman of the Federal Deposit Insurance Corp. said Wednesday. Bair said she hopes Congress and the Fed issue similar rules for nonbank lenders, such as the now-bankrupt New Century.