WASHINGTON -- Homeowners unable to pay monthly mortgage bills and facing foreclosure shouldn't count on help from Washington this year.
Regulators and lawmakers seem to be taking a wait-and-see approach as they confront the fallout from several years of lenders making too many home loans to people with inadequate credit.
It would be a mistake to overreact to a market that is already showing signs of self-correcting at a time when little evidence has emerged that the broader economy is at risk, according to regulators and some lawmakers. They also note that consumer spending remains solid, the nation's jobless rate is still low, and stock indexes have hit record highs in reaction to strong corporate profits.
"We have an obligation to prevent fraud and abusive lending," Federal Reserve chairman Ben Bernanke said in a speech Tuesday. "At the same time, we must tread carefully so as not to suppress responsible lending or eliminate refinancing opportunities for subprime borrowers."
Consumer advocates, who see a rare opportunity to strengthen lending laws, say that reflects misguided optimism, and point to housing statistics as proof that action is warranted.
The National Association of Realtors said Wednesday it expects sales of existing homes to drop 4.6 percent this year to 6.2 million while the median home price is expected to fall 1.3 percent to $219,000.
The foreclosure rate nationwide is rising at an annual rate double that of two years ago.
If the prospect of soaring foreclosures doesn't motivate Congress "to take firm and deliberate action, I don't know what on this God's earth will," says John Taylor, president of the Washington-based National Community Reinvestment Coalition, which advocates for low-income and minority groups.
However, John Robbins, chairman of the Mortgage Bankers Association, predicts foreclosures among borrowers with the riskiest credit will amount to 0.25 percent of US mortgages. "No seismic financial occurrence is about to overwhelm the US economy," Robbins said in a speech last month.
Mark Adelson, an analyst with Nomura Securities in New York, warns that the housing market would be hurt if some banks overzealously arrange loan workouts.
"Lending money is not about being nice," Adelson said. "It's a business."
Lawmakers and regulators say they are balancing how to make sure high-risk borrowers can still get loans against efforts to rein in abusive lending practices.
"We will try to make sure that we don't inadvertently regulate subprime lending to death," said Representative Brad Miller, a North Carolina Democrat and longtime proponent of predatory lending legislation.