One of the biggest issues for both financial institutions and consumers in recent years has been home financing. When the real estate market took a nose-dive in 2008, many lenders and customers found themselves in trouble, paying off properties that continued to be worth less than their mortgage. Many have placed the blame on government institutions for not doing enough to protect consumers who may have been given loans they could not afford. In an effort to combat recent consumer financing issues, California Congresswoman Maxine Waters, a senior member of the Financial Services Committee, reintroduced H.R. 1977, which passed in the House, and seeks to reform the Federal Housing Administration. In remarks during a Subcommittee on Housing, Insurance and Community Opportunity Hearing on “Legislative Proposals to Determine the Future Role of FHA, RHS and GNMA in the Single- and Multi-Family Mortgage Markets,” Waters said that her bill would make sure lenders were not engaged in illegal activity. “The FHA Reform Act is important for households across the country because it will enable FHA to respond to the current housing and economic crisis and continue to provide opportunities to millions of Americans for homeownership. As the private market has contracted, FHA has stepped into the void and injected much needed credit into our mortgage system. Increasingly, it is the only option available for American home buyers with less than a 20 percent down payment,” said Congresswoman Waters. The legislation will also force the FHA to provide data to the public, requiring the agency to hire contractors for credit risk
analysis assessments and other provisions. The original co-sponsors of the bill were Barney Frank, of Massachusetts, ranking member of the Financial Services Committee and Luis Guiterrez, of Illinois, ranking member of the Housing, Insurance and Community Subcommittee. On a state level, government leaders have been passing other type of reforms. In Texas, the state legislature recently considered a short-term financing-related bill that would restrict the amount of interest lenders could charge. Critics say short term lenders, who can charge more than 500 percent on an annual percentage rate, need to have limits put on interest rates.