Providing for Consideration of H.R. 1728, Mortgage Reform and Anti-Predatory Lending Act

Floor Speech

PROVIDING FOR CONSIDERATION OF H.R. 1728, MORTGAGE REFORM AND ANTI-PREDATORY LENDING ACT -- (House of Representatives - May 06, 2009)

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Ms. PINGREE of Maine. Madam Speaker, House Resolution 400 provides for initial consideration of H.R. 1728, the Mortgage Reform and Anti-Predatory Lending Act. The rule provides for 1 hour of general debate to be controlled by the Chair and ranking member of the Committee on Financial Services. After the general debate, there will be no further consideration of the bill except pursuant to the subsequent rule.

Homeownership has always been a key part of the American Dream. Unfortunately, for hundreds of thousands of Americans, that dream has been shattered by predatory lenders that entice them to accept loans they could not afford.

Now, across this country, hardworking families are unable to pay loans they can't afford, and they are losing their homes to foreclosure in unprecedented numbers. On top of this, many would argue that the extreme problems in the mortgage industry have been one of the most serious causes of our current, economic problems.

This week we have the opportunity to rein in these lending practices. H.R. 1728, the Mortgage Reform and Anti-Predatory Lending Act of 2009 is a major step forward in curbing abusive and predatory lending. This Congress has already passed legislation aimed at invigorating the housing market, by helping new homebuyers purchase homes and dispensing of many of the toxic assets that have had our economy in a stranglehold.

The bill we take up today is the second and equally important step of building a stronger foundation. The regulations that are proposed will put a new face on the mortgage system that has become rife with fraud.

H.R. 1728 would outlaw many of the worst industry practices, while also preventing borrowers from deliberately misrepresenting their income to qualify for a loan. The message is simple: Lenders can't give loans to people who can't afford them and borrowers have to tell the truth about their finances when applying for a loan. If you can't play by the rules, you will be held accountable.

This bill draws upon everything that was once fundamentally sound about our banking system. It takes us back to a time when community bankers knew their consumers, to when they understood clearly what they could afford and to when they worked with them to offer loans that worked best for their families.

This is a far cry from some of the practices developed during the real estate boom, when mortgages became far more risky and terms like ``no-doc lending'' and ``liars loans'' became part of our language.

Madam Speaker, this bill sets minimum standards for mortgages requiring that consumers must have a reasonable ability to pay the loan back, and that mortgage refinancing must provide a net tangible benefit to the consumer.

All mortgage originators will be licensed and registered. Securitizers and other participants in the secondary mortgage market, for the first time, under Federal law, will be liable for supporting irresponsible lending.

The bill also prohibits financial incentives that encourage mortgage originators to steer consumers to higher cost and more abusive mortgages. In other words, lenders can't sell consumers loans that aren't good for them.

Over the last decade, many subprime loans were made to borrowers who, due to their weak credit histories, were high credit risks. This bill will make sure that, instead of rewarding originators for pumping out high volumes of costly mortgage loans, there will be incentives for lenders to give borrowers the best possible price and stick with the borrower over the course of the loan.

And any creditor that violates the standard set forth in this bill will be liable to the consumer. They will be required to either rescind the loan and pay for all the legal fees or work with them in a timely fashion to modify or refinance the loan at no additional cost to the borrower.

Somewhere along the line, our mortgage system has lost its way at a great cost to our economy. The affordable, 30-year fixed rate mortgage that allowed generations to experience the American Dream of homeownership has been tragically replaced with a subprime loan, teaser rates, and unaffordable payments.

Commonsense principles, like having the ability to pay, were abandoned in favor of schemes that involved collateralized debt obligation and credit default swaps. And as this financial house of cards collapsed, it is now the American taxpayers that are left holding the bag.

Madam Speaker, I hope we have learned our lesson. It is time to bring responsibility and accountability back to mortgage lending and to make sure we don't face another crisis like this. This bill is essential if we are to stabilize the housing market, to end these abusive practices, and to get our economy back on track.

I commend my colleagues, Mr. Miller, Mr. Watt, and Chairman Frank for their determination to this critical issue and their hard work in bringing it to the floor today.

I reserve the balance of my time.

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Ms. PINGREE of Maine. First, I once again want to thank Mr. Miller and Mr. Wamp, my colleagues, for their excellent work on this bill, and to Chairman Frank for his work as well and for being here on the floor with us today for some very lively and important debate that clearly emphasized the importance of this bill, how long we have waited for this reform, and the damage that has been done by not having this reform for this considerable length of time.

By ensuring borrowers only secure loans that they can afford, this legislation will give Americans the best opportunity to purchase and maintain a home.

This legislation is about accountability. It will reward people who play by the rules and guarantee hard consequences for those individuals and institutions that do not. It's good for borrowers, it's good for lenders, and it is very good for our economy as a whole.

I urge a ``yes'' vote on the previous question, and on the rule.

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