Reps introduce sub-prime lending reform legislation: Bill to curb unscrupulous lending practices, increase protections on homebuyersMortgagePress.comSub-prime lending reform legislation
Recently, House Financial Services Committee Ranking Member
Spencer Bachus, joined by original co-sponsors Reps. Paul Gillmor
and Deborah Pryce, introduced legislation to better protect
homebuyers from predatory lending practices.
The Fair Mortgage Practices Act is the culmination of a 16-month
effort to achieve a bipartisan solution to concerns about unfair
practices within the sub-prime lending industry.
The bill includes the following new or enhanced consumer
• Creates a national registration and licensing standard
for mortgage originators to enhance accountability and
professionalism within the industry;
• Increases transparency in the mortgage process by
simplifying disclosures for borrowers;
• Encourages financial institutions to evaluate a borrower's
ability to repay a mortgage loan before extending credit;
• Increases support for housing counseling;
• Restricts prepayment penalties on hybrid adjustable-rate
mortgages, including 2/28s and 3/27s.
• Requires that sub-prime mortgages have escrow accounts for
taxes and insurance at the time the loan is consummated;
• Strengthens enforcement against mortgage fraud schemes;
• Improves the integrity of appraisals.
"Homeownership should remain the American dream, not a
nightmare. For far too long, my home state has been subjected to
unscrupulous lenders, loose underwriting standards and high
foreclosure rates. Ohioans have rightfully demanded their
representatives take action to stem the wave of foreclosures, and
this bill answers their call," said Gillmor, ranking member of the
Subcommittee on Financial Institutions and Consumer Credit.
"There is no larger consumer protection issue facing my home
state of Ohio," said Pryce, ranking member of the Subcommittee on
Capital Markets, Insurance and Government Sponsored Enterprises.
"Ohio's foreclosure rate is now three times the national average,
one in six sub-prime loans is delinquent and the problem is
expected to worsen. While many foreclosures result from serious
illnesses and job loss, it is obvious that aggressive lending, an
abundance of sub-prime loans and predatory lenders have helped to
create a crisis in Ohio."
"Let me commend the bill's original co-sponsors—Reps. Paul
Gillmor and Deborah Pryce—for the leadership they bring to
this important issue," stated Bachus.
Bachus also expressed his hope that this sub-prime lending bill
will be given prompt consideration by the Financial Services
Committee and move expeditiously to the House floor. "We have had
multiple hearings, shared ideas and adopted a 'Sense of The
Congress Resolution.' It is time now to adopt an approach that
maintains the benefits that sub-prime lending has brought to our
citizens while strengthening protections against the abusive
practices which threaten the sub-prime market.
"Both protecting borrowers and preserving access to credit are
critically important if we are going to keep the dream of
homeownership and all its benefits attainable for working families.
This is an important issue, which we have studied, debated and
agreed on the need for legislation. Now we need to act."
For more information, visit http://financialservices.house.gov.