Mortgage Relief Bill Would Drive Up Cost of Loans, Limit Lender Flexibility, Bankers Say

By Matt Squire

A federal bill that would require banks and other institutions that service mortgage loans to negotiate workouts for troubled borrowers would unfairly limit the lenders' ability to foreclose, industry representatives said Wednesday at a congressional hearing in Washington, D.C. The proposed legislation, introduced by U.S. Representative Maxine Waters, would require mortgage servicers to make a "reasonable effort" to restructure delinquent loans to keep borrowers out of foreclosure. Borrowers would have the right to block pending foreclosures through "qualified written requests." "We can no longer rely only on the voluntary actions of the mortgage industry to keep as many distressed borrowers...