House Committee Eyes Mortgage Reform

The House Financial Services Committee is slated this week to hold a hearing on mortgage reform legislation. Representatives Brad Miller, D-N.C., and Mel Watt, D-N.C., last month introduced the bill, H.R. 1728 — called the Mortgage Reform and Anti-Predatory Lending Act of 2009 — which aims to curb predatory lending, “which has been a major factor in the highest home foreclosure rate in the nation in 25 years,” the committee said in a statement. The committee, chaired by Barney Frank, D-Mass., called the legislation “tougher” than the version approved by the House in 2007 but never passed by the Senate. The goal, however, remains the same: to impose strict regulations on originators to cut down on unaffordable mortgages, refinanced mortgages that have no positive effect on monthly payments, and instances of borrower fraud. The previous version aimed to “prevent another subprime mortgage meltdown,” the committee said. The legislation would impose regulations that prohibit mortgage originators from steering any consumer to a loan that the consumer lacks a reasonable ability to repay, does not provide a net tangible benefit in the case of a refinancing, or has predatory characteristics. Steering any consumer from a prime loan to a subprime loan, and engaging in abusive or unfair lending practices that promote disparities among consumers of equal credit worthiness but different race, ethnicity, gender, or age, would also be prohibited, according to a summary of the bill. Read the bill. Write to Diana Golobay at [email protected].