Mortgage industry weighs in on Ney-Kanjorski BillMortgagePress.comNey-Kanjorski Bill
The House Subcommittee on Housing and Community Opportunity met
on Sept. 29 for a hearing entitled, "Licensing and Registration in
the Mortgage Industry." The hearing focused on the pros and cons of
the patchwork of state licensing, registration and education
requirements for the mortgage industry. H.R. 1295, the Responsible
Lending Act of 2005--co-sponsored by House Financial Services
Housing Subcommittee Chair Bob Ney and ranking member of the
Capital Markets Subcommittee, Rep. Paul Kanjorski--seeks to curb
abusive lending practices in the sub-prime market while ensuring
that sub-prime loans remain available to consumers with
less-than-perfect credit histories. The bill would create uniform
national standards that would pre-empt state predatory lending
laws. During the hearing, the Title V "Requirements for Mortgage
Brokers" under H.R. 1295 were discussed. Title V would give states
three years to pass uniform statutes for the licensing of mortgage
brokers, create federal mortgage broker requirements for those
states that do not pass compliant legislation, and establish a
national database of licensed mortgage brokers.
In testimony before the subcommittee, National Association of
Mortgage Brokers Government Affairs Committee Chair Joe Falk
objected to the fact that in its current form, H.R. 1295 imposes
requirements on mortgage brokers that would not apply to mortgage
bankers and other types of loan originators, thereby placing
brokers at a competitive disadvantage. He noted that the bill would
actually weaken consumer protections if loan officers were excluded
from the licensing requirements.
"It's good public policy to protect all consumers, regardless of
where they choose to get their mortgage from," said Falk.
In contrast to NAMB's position, the Mortgage Bankers Association
(MBA) was generally supportive of the bill in its current form.
"Title V of H.R. 1295, the Responsible Lending Act of 2005, will
elevate the standards within the mortgage brokering industry, lead
to greater accountability, and make compliance easier for
multi-state brokers," said Teresa Bryce, co-chair of the MBA's
State Licensing Task Force during her testimony.
Bryce stated that mortgage bankers and loan originators working
for mortgage bankers didn't require licensing under H.R. 1295
because they are already subject to several levels of oversight
from federal and state government. She also suggested that mortgage
bankers were less prone to engage in abusive lending practices
since, unlike mortgage brokers, they have capital that remains at
risk beyond a loan's closing date.
Rep. Stephanie Tubbs Jones of Ohio noted during the hearing that
the differences between mortgage bankers and mortgage brokers may
be a bit too subtle for minority and low-income homebuyers because
of their relative lack of financial sophistication. She urged that
both mortgage bankers and brokers be licensed.
For more information about H.R. 1295, visit www.house.gov.