Mortgage Reform and Anti-Predatory Lending Act of 2007

MORTGAGE REFORM AND ANTI-PREDATORY LENDING ACT OF 2007 -- (House of Representatives - November 15, 2007)

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Mr. VAN HOLLEN. Mr. Chairman, I offer an amendment.

The Acting CHAIRMAN. The Clerk will designate the amendment.

The text of the amendment is as follows:

Amendment No. 17 offered by Mr. Van Hollen:

Page 71, line 5, strike the closing quotation marks and the second period.

Page 71, after line 5, insert the following new subsection:

``(m) Closing Costs.--In the case of a residential mortgage loan, any costs incurred in connection with the consummation of the loan may not exceed by more than 10 percent the estimate of the amount of such costs disclosed to the consumer in advance of the consummation of the loan.''.

The Acting CHAIRMAN. Pursuant to House Resolution 825, the gentleman from Maryland (Mr. Van Hollen) and a Member opposed each will control 5 minutes.

The Chair recognizes the gentleman from Maryland.

Mr. VAN HOLLEN. Mr. Chairman, let me begin by commending the chairman of the Financial Services Committee, Mr. Frank, and the ranking member, Mr. Bachus, for crafting a bill that is before us today to help protect homeowners across the country and to stop predatory lending.

The amendment I am proposing is designed to protect consumers from bait-and-switch schemes perpetrated by a small number of unscrupulous lenders who have learned to exploit flaws in the existing system. Under the existing law we have today, lenders are required to provide homeowners with a good-faith estimate of their settlement costs, the costs they will have when they settle on a transaction.

However, under current law there is absolutely no penalty for lenders who are widely off in providing those estimates. We have many cases where you have a few bad actors who lure consumers to borrow by low-balling their estimate of closing costs only to jack-up those costs when it comes to the last minute at the settlement table.

This amendment would address this problem by saying that in the case of residential mortgage loans, the amount of closing costs may not exceed by more than 10 percent any estimate of the closing cost provided to the consumer in advance of closing. By setting that kind of ceiling, we reduce the chance that borrowers will be blind-sided by unexpected fees at closing.

The intent of this amendment is to protect consumers from negligent or fraudulent lenders and introduce greater confidence and certainty into the process.

Mr. Chairman, as currently drafted, I believe this amendment is too broad. We need to make sure we hold lenders accountable for estimates that are within their control, not those estimates that may be outside of their control. In a moment I am going to move to withdraw the amendment.

But before that, I would like to yield to the chairman of the committee.

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