[StBernard] FSC Website Update- Press Release

[Westley Annis]

House Passes Historic Mortgage Reform Legislation

 

Washington, DC - The U.S. House of Representatives today approved historic
bipartisan legislation to reform mortgage and anti-predatory lending
practices by a vote of 291 to 127.  H.R. 3915, the "The Mortgage Reform and
Anti-Predatory Lending Act of 2007" will establish a national standard to
rein in the abusive lending practices that contributed to the current
mortgage crisis.

 

"We are dealing with legislation that seeks to prevent a repetition of
events that caused one of the most serious financial crises in recent times.
There is no debate about what is the largest single cause of that.
Innovations in the mortgage industry in themselves are good and useful, but
were conducted in such a complete unregulated manner and led to this
crisis," said Financial Services Committee Chairman Frank.  "I thank Ranking
Member Bachus, representatives Brad Miller, Melvin Watt, and Financial
Services Committee members from both sides of the aisle for their hard work
on this bill."

 

"Many believe that faulty mortgage lending practices have precipitated the
credit crisis, and that the situation will get worse before it gets better,"
stated Ranking Member Spencer Bachus. "This legislation achieves two very
important goals: implementing reforms that will help protect consumers from
predatory lending practices, and preserving working Americans' access to
consumer credit. While H.R. 3915 is not a perfect bill - no bill ever is -
it has been significantly improved through bipartisan negotiations."

 

This comprehensive legislation will create a licensing system for
residential mortgage loan originators, establish a minimum standard
requiring that borrowers have a reasonable ability to repay a loan, and will
attach a limited liability to secondary market securitizers.  The
legislation will also expand and enhance consumer protections for "high-cost
loans," will include protections for renters of foreclosed homes, and will
establish an Office of Housing Counseling through the Department of Housing
and Urban Development.  

 

The legislation will also include provisions for:

 

*	Registering Mortgage Originators to Prevent Abuses:  Currently,
there is no national standard for the licensing of mortgage originators.
This has allowed for lax oversight and enforcement of how mortgages are made
and sold and in many areas had lead to the potential for abuse.  H.R. 3915
will require originators to be part of a national registration system,
either through the states or the Department of Housing and Urban
Development.  This system for licensing and registration will ensure  that
mortgage originators are registered in a national database (much like
securities brokers) and meet minimum education and certification standards.
*	Ensuring Responsible Lending: Mortgage originators will be required
to provide full disclosures and present consumers with appropriate
mortgages. This means that the originator will have to ensure that a
consumer who receives a mortgage loan: 1) has a reasonable ability to repay
the loan; and 2) will receive a net tangible benefit from the loan in the
case of a refinancing. 
*	Preventing Abusive and Discriminatory Lending:  Statistics have
shown that many homeowners in the current mortgage crisis received more
expensive loans than they qualified for. This is often the result of a
predatory practice known as "steering."  H.R. 3915 will prohibit the
undisclosed and unfair compensation schemes that disadvantage borrowers, and
require regulations to prevent steering for subprime loans.  Mortgage
originators who engage in predatory practices and loan steering will be
subject to strict penalties.
*	Holding Wall Street Accountable: Because mortgage companies can sell
loans on the secondary market, they are often bought by large Wall Street
firms and turned into securities for investors.  This bill contains
unprecedented federal consumer protections that will subject Wall Street
firms to liability if they buy, sell and securitize loans that consumers
cannot repay.  They will be held accountable by consumers and will have the
ability for loans to be rewritten and reworked.
*	Establishing a National Standard for Liability:  The current
patchwork of state laws across the country has led to a lack of clear
accountability in the lending process. H.R. 3915 will establish a national
standard regarding assignee and securitizer liability, requiring that the
borrowers have a reasonable ability to repay and ensuring that there will be
a net tangible benefit to the borrower.  Wall Street firms will finally be
held accountable at the federal level for their actions in the mortgage
market, while States remain free to pass more stringent laws against lenders
and originators. 
*	Protecting Tenants:  Renters can also be affected if the homes that
they rent go into foreclosure.   This legislation will provide protections
for renters so that they receive proper notification and are given time to
relocate before the home they rent is foreclosed.
*	Providing Consumer Protections for High Cost Loans: Provides
Consumer Protections for High Cost Loans: H.R. 3915 expands the scope of and
enhances consumer protections for "high-cost loans" under the Home Owners
Equity Protection Act by lowering points and fees and interest rate triggers
prohibiting practices that increase the risk of foreclosure such as balloon
payments, encouraging a borrower to default; and requiring more pre-loan
counseling.

 

For more information about H.R. 3915, the Mortgage Reform and Anti-Predatory
Lending Act of 2007, please visit: financialservices.house.gov.

 

  

http://financialservices.house.gov/