Mortgage Reform and Anti-Predatory Lending Act

Floor Speech

MORTGAGE REFORM AND ANTI-PREDATORY LENDING ACT -- (Extensions of Remarks - May 07, 2009)

SPEECH OF HON. STENY H. HOYER OF MARYLAND
IN THE HOUSE OF REPRESENTATIVES

The House in Committee of the Whole House on the State of the Union had under consideration the bill (H.R. 1728) to amend the Truth in Lending Act to reform consumer mortgage practices and provide accountability for such practices, to provide certain minimum standards, for consumer mortgage, loans, and for other purposes:

* Mr. HOYER. Mr. Chair, it is well-known by now that our economic crisis began as a foreclosure crisis. It began with homeowners across America signing up for mortgages they could not afford. And even though few of us knew it at the time, much of our financial system was riding on their ability to pay those mortgages off. When it became clear that many of them could not, the economic chain reaction affected every community in America. For a family, a foreclosure is traumatic enough--but we have also learned from this crisis that foreclosures can have wide public consequences, as well.

* Of those who applied for mortgages they could not possibly pay back, some were simply irresponsible. But many others were hardworking, responsible homeowners who fell victim to predatory lending. Unfortunately, incentives in our financial system made that predatory lending possible: unscrupulous mortgage brokers were not required to provide sufficient information to homeowners, and those who then sold the mortgages had little reason to see that they were sound.

* This bill goes a long way toward correcting those flaws, protecting future homeowners, and cracking down on predatory lending. It helps consumers get full information--the information they need to decide wisely on what is one of the biggest financial commitments of their lives. It prevents lenders from steering borrowers into higher-cost loans and bans yield spread premiums and other compensatory incentives that lead brokers to push those loans on borrowers. It also establishes national standards for the protection of borrowers and ensures that those who entrap consumers in predatory loans are liable for adjusting the loan's terms and paying the borrower's costs, including attorneys' fees.

* Finally, this bill requires those who securitize loans to third parties to put ``skin in the game'' and retain interest in at least 5% of the credit risk of each loan they sell or transfer. This provision will ensure that, at every link of the chain, there is an interest in seeing that the loan is repaid and that the homeowner does not go into foreclosure.

* Mr. Chair, this is a strong, carefully deliberated response to the foreclosure crisis, one that rules out many of the unscrupulous practices that harmed so many responsible families--and helped put an entire economy at risk. I believe that if these provisions had been in place 10 years ago, the foreclosure crisis might have been averted. We cannot turn back time. But we can learn--and if we have learned anything, it is how much we need legislation like this. I urge my colleagues to support it.

Source