Democrats Attempt to Be the Mortgage Nanny

The Boston Globe reports:

As the mortgage crisis deepens, causing stock market jitters and forcing middle class families out of their homes, the Democratic presidential contenders are seizing on the issue, a tailor-made opportunity for them to accuse Republicans of letting rapacious, unregulated companies victimize hardworking families.
Today in New Hampshire, Hillary Clinton said she would ban fees that penalize early repayments and create a $1 billion fund to help struggling homeowners avoid foreclosure.
Former North Carolina Senator John Edwards has called for banning a longer list of controversial lending practices, including balloon loans where the interest rates grow dramatically over time. Senator Barack Obama of Illinois introduced a bill that would create new criminal penalties for mortgage professionals found guilty of fraud and offer counseling for homeowners to avoid foreclosure. And Senator Chris Dodd of Connecticut, chairman of the Senate banking committee, is trumpeting his own efforts to combat the problem.
The more the crisis ripples through the economy, the more it will help Democrats make the case that Republican economic policies have spurned middle- and lower-income families, some campaign watchers said.
"It's an enormous opportunity for the Democrats to criticize the failures of the Bush administration, the fallout we are seeing from laissez-faire economic policies," Emory University political scientist Alan I. Abramowitz said yesterday.
In her speech at Ernest P. Barka Elementary School, Clinton said the next president must "restore a sense of fairness to our economy."
"What the president calls the ownership society, it's the yo-yo economy," she said. "Some go up and some go down, and someone is pulling the strings."
In addition to banning prepayment penalties, Clinton would also require mortgage lenders to include taxes and insurance in their calculations of whether the borrowers can afford the mortgage payments. She would force brokers to disclose that they earn bigger profits from selling bigger mortgages, meaning their advice isn't necessarily in the borrowers' interest.
She is also seeking to beef up state licensing standards for brokers and to publish an online registry detailing brokers’ employment histories and complaints against them. Clinton said she would introduce legislation after Labor Day.
In addition to banning more lending practices than Clinton, Edwards wants to rewrite bankruptcy laws and create a fund to help homeowners free themselves from "underwater" mortgages that are larger than the value of their home.
Of the top-tier Democratic contenders, Edwards has been campaigning most aggressively on the economic struggles of working people. Today, his campaign sought to portray Clinton as late to the issue and weaker in her response.
"We're glad Senator Clinton has chosen to follow his lead," spokeswoman Colleen Murray said in a statement. "The Edwards plan remains the most aggressive — he supports a national law that would prohibit abusive lending practices, no exceptions."

No word yet from Fannie Mae.