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. MURPHY of Connecticut. I thank the gentleman for yielding.

I thank Chairman Miller and Mr. Watt for their leadership in bringing this bill through the committee. I want to draw attention to one provision of the bill and underscore the importance of the provisions here that prohibit steering of borrowers into higher-cost mortgages than they would otherwise qualify for.

This mirrors legislation that I introduced earlier this year, H.R. 3813, the Mortgage Kickback Prevention Act. The bill before us prevents mortgage originators from inappropriately steering consumers into higher-cost loans than they would otherwise qualify for.

This is a commonsense measure, and it is made more reasonable by the restriction to apply this only to subprime loans. To me and my constituents, it is pretty simple. Brokers and mortgage originators shouldn't have an incentive to put borrowers into more expensive loans than they would otherwise qualify for.

Frankly, as we move forward, I think it is important to understand that disclosure doesn't do the entire trick here. Most borrowers have no idea what it means when their broker discloses that they are going to pay a yield-spread premium amidst the mountains of paperwork that you are required to fill out for a residential mortgage. For these borrowers who have the least amount of leverage in the process, we need to have some clear lines. This bill does that.

That is why it makes sense to simply say the brokers and originators cannot inappropriately put borrowers into loans they otherwise would not qualify for. This Congress has responsibility, as we are doing today, to reset the rules.

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