The National Association of Mortgage Brokers, reacting to lending industry reform legislation introduced today by Reps. Brad Miller (D-N.C.), Mel Watt (D-N.C.) and Barney Frank (D-Mass.), said that borrowers could be hurt by the proposal to define "high-cost loans" as any with points and fees of at least 5 percent -- down from the current 8 percent threshold.

Mortgages that meet the high-cost definition are subject to the Home Ownership and Equity Protection Act (HOEPA), which -- according to the FTC -- "prohibits equity stripping and other abusive practices in connection with high-cost mortgages."

From the mortgage brokers' press release:

NAMB is concerned many lenders will decide not to make loans that cross the proposed HOEPA threshold, which would make many consumers vulnerable as interest rates rise.

[NAMB President George] Hanzimanolis likened this provision to government sanctioned 'red-lining.' "These restrictions are going to cut off credit to people who are generally in lower economic areas who deserve and need credit," he concluded.

The association says it is in favor of other provisions of the legislation, such as national standards for loan originators and a straightforward disclosure of fees.

The Congressmen sponsoring "the Mortgage Reform and Anti-Predatory Lending Act of 2007" also have a press release, issued today:

“This bill represents a significant step forward to clean up and prevent a number of the questionable practices that, unfortunately, took hold in the mortgage lending industry in the last several years.  I hope the industry will embrace the changes and allow the bill to move forward quickly” said Rep. Melvin Watt.