Portfolio Lending and Mortgage Access Act

Floor Speech

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Ms. SEWELL of Alabama. Mr. Speaker, I thank Ranking Member Waters.

Today I rise in opposition to H.R. 1210. During the financial crisis of 2008, predatory subprime lending was far too prevalent and underwriting standards were not adequately adhered to by lenders.

In response to these practices, the Dodd-Frank Act created a new set of mortgage underwriting rules. These qualified mortgage rules are critically important to helping ensure that all American consumers are protected against harmful mortgage products and abusive lending practices. These commonsense rules now require a lender to make a good faith effort to determine that a borrower has the ability to repay a mortgage.

Additionally, the final rule contains critically important and special provisions and exemptions that are available only to small lenders and to lenders that operate predominantly in rural and underserved areas, exceptions that are critically important for districts like mine.

The QM rules simply state that, if banks make risky loans, like interest only, or adjustable mortgage loans, consumers can hold them accountable if those mortgages go bad. Lenders are also responsible for accurately researching and documenting borrowers' incomes and their ability to repay.

Unfortunately, as currently drafted, H.R. 1210 would undermine these critically important consumer protections by exempting all depository financial institutions, large and small, from QM standards as long as the mortgage loans in question are held in portfolios by those institutions.

H.R. 1210, broadly defined, would broaden the qualified mortgages to include all mortgages held on a lender's balance sheet.

Under the bill, depository institutions that hold a loan in portfolios could arguably receive legal safe harbor, even if the loan contains terms and features that are abusive and harmful to consumers.

Essentially, the bill would limit the rights of borrowers to hold harmful those banks that do bad practices.

We all know that no regulation or law is perfect. We must work together to strike a delicate balance and ensure that regulations are pragmatic and workable without placing undue harm on financial institutions that provide critically important access to capital for potential homebuyers.

Home ownership remains an important goal for most Americans and one of the most traditional gateways to the middle class. However, the financial crisis of 2008 reminds us that we must have in place sensible safeguards to protect consumers against harmful mortgage products.

I want to thank the ranking member for her leadership on this matter.

I urge my colleagues to oppose H.R. 1210.

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