According to the Boston Globe online,
Massachusetts is looking to impose some of the most stringent mortgage regulations in the nation in the attempt to prohibit mortgage companies from granting loans borrowers cannot afford. Lenders and brokers will not be permitted to approve loans that they do not have a “reasonable belief” the customer can repay. The decision would be based on available information about the borrower’s financial circumstances to make that judgment. Um, duh. Do Massachusetts public officials really think that mortgage companies enjoy filing for bankruptcy? It is in the companies best interest to approve loans borrows CAN pay. Foreclosure is expensive and time-consuming, not only for the homeowner, but also for the bank! Yes, many mortgage companies dug their own graves and there has been a lot of housecleaning in the industry in general….this is how the free market regulates itself. The poorly run businesses will crash, while the smart and responsible businesses will prosper. The poor decisions of some mortgage companies have strongly impacted our economy, but those companies are suffering from their own misdeeds.
Massachusetts will end up regulating the companies that already self-regulate as a good business practice.