Will Congress come to the rescue of consumers to initiate a reform of mortgage lenders of home loans? May. The Democrat-led Congress may introduce legislation to establish tough measures to curb abuses within the mortgage industry.

The mortgage industry includes not only mortgage lenders, mortgage brokers, but also home builders who own mortgage companies, Wall Street, and other investors in mortgage security. If Congress implements tough measures, it will protect future consumers from being exploited. However, it can have a side effect in that it can protect buyers of mortgage-backed securities. The recent past has seen absolute chaos in the market. Countrywide Financial’s second-quarter earnings fell, causing share prices to drop to a 52-week low on July 24, 2007. Its second-quarter net income fell to $ 485.1 million from $ 722.2 million, a year ago with revenue falling 15% to $ 2.55 billion.

This week, American Home Mortgage, a major national mortgage lender, announced that it may not be able to finance the current inventory of home loans that exceed $ 300 million, causing its stock value to plummet by 90%. But the subprime disaster is hitting even prime loan lenders and borrowers.

Wall Street is also reeling from the rise in foreclosures, home oversupply, subprime mortgages, defaults and more. Yet Wall Street is complicit with homebuilders and mortgage lenders in creating this problem.

Beazer Homes, one of many home builders who started or increased its home loan business to make it easier to buy their homes. Now, however, accusations are emerging from former homeowners who have defaulted on their mortgages that some builders inflated their income or altered some material facts in their mortgage applications for approval. In order to sell houses, many people who were not financially qualified were approved for mortgages and other home loans, such as mortgage refinancing.

The housing market boom of the last five years was due to many different factors. Banks, mortgage companies and home builders relaxed their credit standards and flooded the market with home loans, along with loans to people with questionable credit. Unlike before, adjustable rate mortgages were distributed to increase your profitability. The folks on Wall Street encouraged this reckless home loan behavior by continuing to buy huge amounts of home loans to repackage them as securities. Many of these mortgage-backed securities contained subprime subprime mortgages.

Now that the housing bubble has burst, rising foreclosure rates, home oversupply, rising mortgage rates, lower demand for home purchases, and negative residual effects on the economy are leading to the government takes a closer look at the role of mortgage lenders, home builders, and Wall Street.

Congress wants to reign supreme in Wild West lending tactics by imposing strict guidelines for lending. But that may not be necessary if the Federal Reserve recommends new consumer protection rules this year. Therefore, Congress may not have to act if the Fed restricts deceptive lending practices among all lenders. Hopefully, national lending standards should supersede various state rules because the mortgage investment market is national.