Mortgage Choice Act of 2015
Floor Speech
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Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I rise today in support of my bill, H.R. 685, the Mortgage Choice Act.
As someone who has worked in the housing industry, this is a very important issue to me and, more importantly, to all of our constituents across the country.
Last year, the qualified mortgage--or QM--ability to repay rule as mandated by the Dodd-Frank Wall Street Reform Act went into effect. Nobody has a problem with that, but the QM rule is the primary means for mortgage lenders to satisfy its ``ability to repay'' requirements.
Additionally, Dodd-Frank provides that a QM, or qualified mortgage, may not have points and fees in excess of 3 percent of the total loan amount.
As it is ambiguously defined currently, ``points and fees'' include, among other charges, fees paid to affiliated, but not unaffiliated, title companies, and amounts of insurance and taxes held in escrow.
As a result of this confusing and problematic definition, many affiliated loans, particularly those made to low- and moderate-income borrowers would not qualify as QMs and would be unlikely to be made or would only be available at higher rates due to heightened liability risks. Consumers would lose the ability to take advantage of the convenience and market efficiencies and choice offered by one-stop shopping.
I, along with my good friend Representative Gregory Meeks from New York, reintroduced H.R. 685, a strong, bipartisan bill that would modify and clarify the way that these points and fees are calculated. This legislation is very narrowly focused to promote access to affordable mortgage credit without overturning the important consumer protections and sound underwriting required under Dodd-Frank's ``ability to repay'' provisions.
Having been a licensed Realtor and coming out of that industry, it didn't take those of us who had been in the industry long to see that there was significant problems with the structure of what had led to the housing crisis in the last number of years.
I tell the story oftentimes of the first closing that I did, where a check was slid across the desk the table to the seller and then a check was slid across the table to the buyer. The closing agent really didn't even know what to say.
It was the first time that they were starting to get into these zero down or even 120 percent loan to values, is what was happening.
I thought to myself, this is not going to end well, and that is the case. We need to have that tightened-up system.
But I think it is important to know that we have some issues with that Dodd-Frank provision. This is one of those.
I do also believe, Mr. Speaker, that it is important to note that when we first introduced this bill in 2012, in the last Congress, it looked substantially different. However, working with my colleagues on the other side of the aisle, I made the decision to make the changes necessary to gain their support of the legislation. As a result, it has been a truly bipartisan effort at every step of the way in the legislative process.
That is why this very legislation unanimously passed both the House Financial Services Committee and the House of Representatives last Congress. In fact, as we dealt with this bill again, the new bill, H.R. 685, it passed out of committee 43-12, after, I think, some had decided that they were going to be against it after they were for it.
It seems that the White House and others on Capitol Hill have decided that, rather than taking care of consumers, and rather than trying to make the bill work, they have decided that it is a citadel that cannot be breached, and not a jot or a tittle of Dodd-Frank can be changed. Otherwise, they label it as bailouts and helping out Wall Street and all these other things.
The real truth of the matter is, Mr. Speaker, we are trying to make sure that real Americans can obtain the American Dream and buy and own their own home.
Specifically, our bill, H.R. 685, would provide equal treatment for affiliated title fees and title companies and clarify the treatment of insurance held in escrow.
When things are held in escrow, they don't belong to the owner, they don't belong to the bank or the title company that is holding it. All they are doing is holding them to then pay for that insurance bill that is going to be coming due. They pay for the insurance or the property taxes that may be coming up.
What happens, when someone writes that check every month, they are putting a twelfth of that total payment every month into that escrow. And it just begs to be clarified.
These commonsense changes will promote access to affordable mortgage credit for low- and moderate-income families and first-time homeowners by ensuring that safer, properly underwritten mortgages pass the QM test.
Whether or not you support Dodd-Frank overall, or specifically within this area, it is clear the law is going to require some tweaks to ensure qualified borrowers aren't locked out of homeownership and the beneficial features of a qualified mortgage.
The QM represents the safest, best underwritten mortgage availability on the market. It is the gold standard, Mr. Speaker. We should want more people getting QMs, not fewer.
Quite frankly, this is something that we should all agree on and, as I pointed out, we did last term. Our bill doesn't touch any of the CFPB's strict underwriting criteria. It doesn't in any way suspend a lender's legal requirement to determine that a borrower has the ability to repay that loan.
Mr. Speaker, this body has the opportunity to help more Americans realize a portion of that American Dream, as we talked about.
You know what the best part of it is, Mr. Speaker? We don't need to pass a grandiose law or decree. All we need to do is work in a bipartisan manner. I think the American people are begging for that, and here is an opportunity to do that. We have done it, and to reform a burdensome regulation that is negatively impacting our constituents is something that we should all strive for.
So I would like to thank my colleague, Representative Meeks, along with many of the others on both my side of the aisle and the other side of the aisle who have worked tirelessly to help fix this flawed provision currently being implemented in Dodd-Frank.
I urge my colleagues to vote in support of H.R. 658 and help make the dreams of their constituents come true and a reality by ensuring that all consumers have greater access to mortgage credit and more choices and credit providers.
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Mr. Speaker, I yield myself such time as I may consume.
I appreciate the opportunity to come and to try to clarify some of the assertions and confused claims that have been thrown out here.
My family has been involved in construction since the 1930s--the 1930s. I will never forget the day--it was a Thursday--when I pulled up right down the street from my home and I saw my cousin's business that they now own that my dad and uncle and grandfather had started.
It is a ready-mix concrete company. Literally, all the guys' trucks were there, all their pickups. It is a small company. It is about 12 or 15 people that work there. Every single one of those cement trucks were parked in the yard, the exact place that they should not be.
I found out later that we had trucks on the way to construction sites that were turned around and came back. That is seared into my memory. I have no interest in going back to where we had been. In fact, I was one of those warning about the practices before serving in this body.
Frankly, if those who were serving in this body who wrote Dodd-Frank had actually talked to a few of the people involved in the industry, they might have understood what the interaction is between the buyer, the seller, the construction agent, the closer, the people that are providing title insurance.
The simple fact is that there is not an understanding of how this system works. We may have a common goal of serving consumers. We have very different visions about how that needs to be done.
As I said, there has been lots of assertions and sort of confused claims thrown around. Many of them, frankly, are problems completely unrelated to what this is, and I am not sure how the activity of the Transportation Committee relates exactly to what our work is on the Financial Services Committee, but I think it is an old adage: when you are losing, you keep talking. That is what has been happening here on the floor for those that have been watching.
The assertion that weak and nonexistent State regulations are out there is just amazing to me, especially in California. I am betting the insurance commissioner in California would be surprised at this assertion, since California is one of the 47 States that regulates title insurance. RESPA laws, disclosure requirements written into law, transparency is a key element in this.
I was a licensed Realtor when agency disclosure first came in. This was in the midnineties. You had to declare whether you were a buyer's agent, a seller's agent, a transactional coordinator. There have been real changes, positive changes, that have happened for the consumer in that industry over the last 20 to 25 years.
The irony in this particular situation is that affiliated companies, those companies that may have been started by the same people--that is the definition, by the way. I might be a small-business owner who owns a real estate company, and I start another company dealing with title insurance. That now, because that is on my personal tax form, is an affiliated company. I can't do or charge what an unaffiliated company could do.
Now, I might buy the argument that was made earlier that these companies can just charge whatever they want to charge, but I could only buy that if my friends on the other side of the aisle would be willing to apply equally the law. The law does not apply equally here. It does not do what they claim that they are trying to do.
The other element that has been talked about a little bit--this is so ridiculous; it strikes me. It is like saying I can't shop at Walmart or at a Meijer store in our area or other places because they sell fresh produce and electronics and hardware. I need to go to a hardware store to go pick up my nails; I need to go to the corner grocer to go pick up my lettuce, and, by the way, if I want to get a flat screen TV, I have got to go somewhere else.
This is about consumers having choices and abilities to utilize a streamline. Those costs need to be disclosed, first of all. Those costs oftentimes are regulated, the vast majority of the times are regulated by the States; yet it just is a clunky system that does not work in the design of Dodd-Frank.
The assertion that any change of Dodd-Frank somehow benefits or is anticonsumer or benefits somebody on Wall Street, go and talk to those owners of those small companies in all of our States, go and talk to them about what their Wall Street affiliation is.
This bill is, frankly, widely viewed as unrealistic and unworkable. It is time that we face that reality and we change some of the elements of this. This is a modest, modest change.
In fact, it is so modest, frankly, Mr. Speaker, that our previous speaker had supported the bill, had supported it when it was in committee, had supported it when it was on the House floor, certainly did not object to it, and I guess maybe I could say supported it because, on August 1 of 2014, she, along with 12 of her colleagues--including one who has gone on to the Senate--12 Democrats signed a letter to Senator Harry Reid requesting him to take my bill up.
Mr. Speaker, I insert for the Record the letter.
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My bill and Congressman Meek's bill was a good bill last Congress, and it is a good bill this Congress because it has not changed at all. It has not changed at all.
To quote it, she urged the Senate to ``quickly adopt the Mortgage Choice Act,'' a bill that would ``improve access to credit'' and ``enhance competition among title insurance providers.''
Frankly, Mr. Speaker, my colleague was right last time, and she should be right in this Congress. Unfortunately, we are seeing that--I am afraid politics may have leaked in. The administration has issued a veto threat, and I think we may have seen why some of this change of heart has happened.
I am, frankly, disheartened for the American people that Presidential politics have already leaked into what this body should be doing, which is representing people, which is making sure that they are getting the best end of the stick, not the sharp end of the stick.
Frankly, Dodd-Frank has delivered the sharp end of the stick, intentionally or unintentionally, way too many times. It is our job to go and fix it and to make sure that the consumers, that our constituents, are getting the best service that they possibly can.
With that, Mr. Speaker, I would like to urge all of my colleagues to join so many of us in a bipartisan fashion who support this bill, who believe that this is the right time and the right bill to rectify this problem, and to get on with it. I request all of my colleagues to support H.R. 685.
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