Dodd introduces anti-predatory-lending bill.
The Home Ownership Preservation and Protection Act of 2007 (S. 2452) would, among other things, prohibit brokers from steering prime borrowers to more expensive subprime loans, create a fiduciary duty for mortgage brokers toward borrowers and provide for a duty of good faith and fair dealing toward borrowers for all lenders.
"Foreclosures are at record levels in our country, hurting homeowners and weakening our economy," said Dodd. "By putting an end to abusive practices such as prepayment penalties and 'steering' homebuyers to more costly loans, and by providing for strong enforcement to ensure that these new protections are followed, my bill will help protect present and future homeowners from the plague of predatory lending."
The Home Ownership Preservation and Protection Act would also:
* Establish new protections for subprime borrowers and borrowers who get nontraditional mortgages. It will require a real analysis of borrowers' ability to repay the loan. The bill prohibits prepayment penalties and yield-spread premiums (YSPs) on these loans, and requires that the loans provide a net tangible benefit to the borrower.
* Provide strong remedies to make sure these standards are met. It will allow state attorneys general to enforce the provisions of the law, and does not pre-empt state law.
* Provide for limited liability for holders of a mortgage made in violation of law, whether it is the original lender or a subsequent investment trust. Unlike current law, which puts the burden on the borrower to find the party responsible for causing the harm, the legislation allows the borrower to go directly to the current mortgage holder for a cure.
MBA Chairman Kieran P. Quinn, CMB, expressed concern with aspects of Dodd's bill and urged caution moving forward.
"The introduction of this bill is an important development, as it will jumpstart the debate in the Senate over how to prevent a reoccurrence of the current troubles facing the mortgage market," said Quinn. "[However,] Senator Dodd's bill does not provide a uniform national standard to protect consumers from predatory lending, a step we feel is necessary to ensure a smooth and efficient marketplace. Further, we are troubled by the bill's 'duty of care' and assignee-liability requirements."
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|Title Annotation:||Briefing Book; Christopher Dodd|
|Date:||Feb 1, 2008|
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