To protect borrowers of home loans from abusive banking industry the US House of Representatives passed a bill ensuring the rights of borrowers on Thursday evening. The bill, which was passed by a 291-127 vote, garnered 64 votes from the Republicans while none of the Democrats opposed the bill. However, the future of the bill becoming a law seems to be uncertain in the US Senate amid strong opposition from the mortgage industry and from the White House. The bill would ban lenders from making loans that borrowers cannot repay, create a nationwide licensing system for mortgage brokers and make Wall Street banks that package mortgage securities into investments, liable for violation of lending laws. The bill echoes the House’s concern for the poor condition of the mortgage market owing to its lax lending practices following which the US housing industry is currently in a pretty bad shape. Financial markets worldwide were badly hit following losses in investments tied to US home loans. Bear Stearns Cos., Britain’s HSBC Holdings and Barclays Group PLC were the latest major banks to predict huge losses. Proponents of the bill say that the current tumultuous situation in the mortgage market could have been avoided had there been strong federal laws years ago. According to the Democrats and consumer advocates, the sub prime loans made to people with weak credit were essentially predatory. They contained confusing terms and conditions, generating high fees for mortgage lenders and forced low-income borrowers into loans they cannot repay. However, criticisms of the bill are pouring in. Many Republicans think that the bill is an overreaction to the mortgage market’s woes and have warned of a flood of lawsuits if it became a law. According to the banking industry, the bill will limit credit availability and will prevent Americans from owning houses. Source:msnbc Image:murraystate