House Passes Polis Provision in Mortgage Reform Bill

Press Release

Congressman Jared Polis (D-CO) today urged his fellow members of the U.S. House of Representatives to support H.R. 1728, the Mortgage Reform and Anti-Predatory Lending Act of 2009, aimed at curbing abusive and predatory lending practices. The legislation passed the House today by a vote of 300 to 114.

"A mortgage is a private agreement between a borrower and a lender, but the sub-prime mortgage crisis brought our country to its knees and necessitates immediate government action," said Polis. "In these troubled times, we need our financial institutions working for us, not against us. This bill will bring much-needed reform to the mortgage industry, an important step toward building a stronger, more stable housing market."

Polis' amendment, which was accepted by House Financial Services Committee Chairman Barney Frank (D-MA) and included into the Manager's Amendment, would allow lenders to give additional weight to their customer's mortgage payment history when refinancing hybrid loans.

"Too often, dutiful American homeowners—who pay their monthly mortgage payments—are turned away because credit problems prevent them from refinancing their loan, often ending in foreclosure," said Polis. "This hurts both lenders and families. Mortgage lending professionals can—and should—be the front line in foreclosure prevention, and my amendment gives them the ability to do so."

The Mortgage Reform and Anti-Predatory Lending Act of 2009 would also:

• Prevent Predatory and Abusive Lending Practices: H.R. 1728 would ban yield spread premiums and other abusive compensation structures that create conflicts of interest or reward originators that "steer" borrowers toward more expensive loans than their financial situation can afford. The bill would also require originators to disclose to consumers the compensation they receive from the transaction.

• Hold Creditors Responsible for the Loans they Originate: The bill would require new federal rules to be written to ensure that creditors retain an economic interest in a material portion (at least 5 percent) of the credit risk of each loan that the creditor transfers, sells, or conveys to a third party. Federal banking agencies would have the authority to make exceptions to the bill's risk retention provisions, including form and amount.

• Protect Tenants who Rent Homes that go into Foreclosure: This legislation will provide protections for renters so that they receive proper notification and are given time to relocate before the home they rent is foreclosed.

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