Martinez Looks To Revisit Mortgage Rules

Washington - The debate over how to curb predatory lending has a major element of deja vu for Sen. Mel Martinez, R-Fla.  In 2002 when he was HUD secretary, Martinez proposed a sweeping rule that would have overhauled mortgage purchases for home buyers, simplifying good faith estimates, requiring mortgage brokers to disclose more of their compensation and allowing lenders to offer one-stop mortgage packaging that could save an average of $700 per closing.

But the proposal triggered a massive backlash throughout the mortgage lending industry. Mortgage brokers protested greater disclosure of a little-known lending practice referred to as a yield spread premium (YSP); brokers and lenders wrangled over what should and should not be included in the good faith estimate; and settlement attorneys and title companies argued that the guaranteed mortgage package would put them out of business.

After Martinez was elected to the Senate in 2004, HUD Secretary Jackson withdrew the rule. But now Martinez would like to revisit some of those issues as Congress begins to tackle ways to curb predatory lending, which has taken on greater steam with more subprime lenders collapsing and foreclosures among homeowners rising.

"The problem is that we didn't fix those issues. I tried and we were about 75 to 80 percent of the way there. The president was very supportive and I think we would have been able to do it, but didn't manage to get it done before I left," Martinez said.

Given Martinez's experience on the issue, Senate Banking Chairman Dodd said he would reach out to Martinez as he crafts a measure. "He can be a tremendous help to us here. He did some great work back several years ago," Dodd noted during a recent hearing on the issue.

To view more information on this article please visit martinez.senate.gov.