By Joe Light | Wall Street Journal
Bankers, housing advocates team up in effort to ease mortgage access for borrowers with weaker credit
A rare coalition of mortgage lenders and left-leaning consumer advocates are calling on the Obama administration to ease up on lawsuits they say are driving banks away from making loans to borrowers with weak credit histories.
In three nearly identical proposals, the Mortgage Bankers Association, 15 left-leaning advocacy groups, and researchers from the Urban Institute and Moody’s Analytics are asking the administration to restrict one of the most powerful tools the U.S. government has used to punish banks for mortgage mistakes.
Some lenders say fears of being sued and slammed with financial penalties have caused them to adopt more stringent mortgage rules than what the federal government requires, shutting out borrowers near the margins.
The Urban Institute, a think tank in Washington, D.C., has estimated that as many as 1.2 million more mortgage loans would be made annually were it not for tight credit restrictions put in place by lenders in the years since the financial crisis as regulators and attorneys ramped up mortgage-related lawsuits and penalties.
