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House passes bipartisan Mortgage Reform bill.

The House last week approved H.R. 3915, the Mortgage Reform and Anti-Predatory Lending Act of 2007. by a bipartisan vote of 291-127. The bill is the first major piece of federal legislation to pass this session that directly addresses the mortgage lending and investment practices that substantially contributed to the current home foreclosure crisis.

Earlier this year, NLC's leadership identified this issue as a top legislative priority for Congressional attention and NLC was among the first organizations to endorse the bill.

The bill, introduced by House Financial Services Committee Chairman Barney Frank (D-Mass,), strikes a balance between reigning in abusive lending practices and encouraging lenders to continue making mortgage capital available in underserved communities and to borrowers with less than perfect credit.

Under the bill, states and the federal government would work together to ensure lender accountability by creating a national licensing and registration system for mortgage originators. The bill would establish a "minimum mortgage standard" by which lenders must make a determination that borrowers have a reasonable ability to repay the loans they are offered.

And, the bill would attach limited liability to secondary market securitizers who buy and sell loans that do not meet the "minimum mortgage standard" and who fail to bring loans into compliance with the standard.

The bill would also expand and enhance consumer protections, such as prohibiting financial incentives for mortgage originators to steer homebuyers into more expensive or higher-interest loans than they are able to repay. The bill contains protections for renters in foreclosed properties and would establish an Office of Housing Counseling in the Department of Housing and Urban Development.

Proponents defeated several attempts to weaken the bill, including a "motion to recommit" that would have preempted all state mortgage regulations in favor of one national standard. Under the bill, federal mortgage regulations would serve as a baseline, and states would be permitted to pass mortgage standards that are in addition to and stronger than the federal ones.

Additionally, the House unanimously adopted an amendment sponsored by Rep. Paul Kanjorski (D-Pa.) that would require all subprime borrowers to have escrow accounts to protect against unpaid taxes and insurance premiums. The amendment also creates new federal appraisal standards.

Although the bill now heads to the Senate, Sen. Christopher Dodd (D-Conn.), chairman of the Senate Banking, Housing, and Urban Affairs Committee, has said he is writing a different mortgage reform bill to be introduced sometime next year. The administration, meanwhile, has indicated concerns that the House bill might make it more difficult for homebuyers to qualify for a loan, but stopped short of threatening to veto it.
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Author:Wallace, Mike
Publication:Nation's Cities Weekly
Geographic Code:1USA
Date:Nov 26, 2007
Previous Article:McCollum seeks to enhance the value of NLC membership.
Next Article:Gridlock over spending bills continues.

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