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Mortgage reform and Anti-Predatory Lending Act passes committee.

A bipartisan measure to increase consumer protections for homebuyers and reform the nation's mortgage finance system passed the House Financial Services Committee and is headed for a full vote in the House before the Thanksgiving recess.

The bill, H.R. 3915, The Mortgage Reform and Anti-Predatory Lending Act, aims to protect homebuyers from certain lending practices and loan products that precipitated the current home foreclosure crisis. In addition, the bill would increase efforts to build consumer literacy about mortgage loans and the home-buying process.

NLC, as an early endorser of the legislation, worked closely with the bill's sponsor, House Financial Services Committee Chairman Barney Frank (D-Mass.), to build support for the bill. In a letter to the committee, NLC said the bill "strikes the right balance by, among other things, encouraging investment in our communities, in the form of mortgage lending, while ensuring responsible lending."

The bill would reform the mortgage process in several areas.

First, the bill would encourage states and the federal government to work together to create a national licensing and registration system for mortgage brokers. Second, the bill would establish a "minimum mortgage standard" to ensure that borrowers have a reasonable ability to repay the loans they are sold.

Third, the bill would attach limited liability to secondary market securitizers who buy and sell loans that do not meet the "minimum mortgage standard." Fourth, the bill would expand and enhance consumer protections for those taking out certain high-cost loans and for renters in foreclosed properties.

Lastly, the bill would establish an Office of Housing Counseling in the Department of Housing and Urban Development.

The National Black Caucus of Local Elected Officials also supported the bill in a letter to the committee that highlighted, among other things, the bill's anti-steering provisions.

Under the bill, all loan originators would be required to present homebuyers with mortgage products that are appropriate for their financial circumstances. Additionally, the bill would ban financial incentives for lenders and brokers to steer borrowers into loans that are more expensive and risky than they qualify.

Although a number of contentious amendments were defeated during committee consideration, some are expected to be reintroduced during the House floor debate. Among them is an amendment from Rep. Richard Baker (R-La.) that would preempt state and local mortgage regulations for a period of seven years. This amendment would prohibit states from passing stronger mortgage regulations than required by federal law. NLC opposed the amendment and joined with other state and local groups to urge the Committee to preserve state and local authority to regulate mortgage lending.

H.R. 3915 is scheduled for a House floor vote sometime during the week of November 12. It is not too late for local elected officials to contact their House Representatives in support of this important legislation. A sample letter of support and talking points can be found on NLC's Legislative Action Center at
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Author:Wallace, Mike
Publication:Nation's Cities Weekly
Geographic Code:1USA
Date:Nov 12, 2007
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