The housing collapse has generated both pain and confusion. The causes of the crisis are many and varied. State-sponsored remedies remain vague and, so far, largely ineffective. The functions of the market -- lower housing prices, declining mortgage rates, fewer new homes -- will gradually repair the damage, and there are fleeting hints of home improvements in recent weeks. Inventories have finally started to shrink and cheaper prices are beginning to attract bargain hunters. Still, the path to full recovery appears to be long and winding.
Some straightforward legislation moving through the General Assembly this session presents a refreshing measure of clarity amid the housing mess. Companion bills sponsored by Sen. Donald McEachin and Del. Jennifer McClellan -- known collectively as the Trust in Lending Act -- would place a legal duty on mortgage brokers to act in the best interests of their clients, just as doctors, lawyers, bankers, and other professionals are expected to. It is astounding that brokers are not already held to this utterly reasonable standard.
Language in the proposed statute is unusually simple, requiring a mortgage broker to "act in the borrower's best interest and in the utmost good faith toward the borrower" and to "make reasonable efforts to secure a loan that is in the best interests of the borrower." Connie Chamberlin, president of Housing Opportunities Made Equal, wrote on our Op/Ed page yesterday about the problems that can arise when brokers betray the trust of their clients.
The Trust in Lending Act would not have prevented the current meltdown. But it is one small yet significant step to help rebuild a vibrant housing market in Virginia. It deserves broad bipartisan support, and we urge legislators to make it the law of the commonwealth.
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