Magazine article Nation's Cities Weekly

House Passes Bipartisan Mortgage Reform Bill

Magazine article Nation's Cities Weekly

House Passes Bipartisan Mortgage Reform Bill

Article excerpt

The House last week approved H.R. 3915, the Mortgage Reform and Anti-Predatory Lending Act of 2007. by a bipartisan vote of 291-127. The bill is the first major piece of federal legislation to pass this session that directly addresses the mortgage lending and investment practices that substantially contributed to the current home foreclosure crisis.

Earlier this year, NLC's leadership identified this issue as a top legislative priority for Congressional attention and NLC was among the first organizations to endorse the bill.

The bill, introduced by House Financial Services Committee Chairman Barney Frank (D-Mass,), strikes a balance between reigning in abusive lending practices and encouraging lenders to continue making mortgage capital available in underserved communities and to borrowers with less than perfect credit.

Under the bill, states and the federal government would work together to ensure lender accountability by creating a national licensing and registration system for mortgage originators. The bill would establish a "minimum mortgage standard" by which lenders must make a determination that borrowers have a reasonable ability to repay the loans they are offered.

And, the bill would attach limited liability to secondary market securitizers who buy and sell loans that do not meet the "minimum mortgage standard" and who fail to bring loans into compliance with the standard.

The bill would also expand and enhance consumer protections, such as prohibiting financial incentives for mortgage originators to steer homebuyers into more expensive or higher-interest loans than they are able to repay. …

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