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House Votes to Bring Back Risky Mortgage Lending

Friday, November 20, 2015
Michael Calhoun

Yesterday, the U.S. House of Representatives passed H.R. 1210. The bill would exempt the nation’s largest banks from rules put in place in response to the economic crisis. Specifically, the bill would give legal protections to any bank that holds any mortgage loan in its portfolio. The bank would receive the legal protections even if it ignored certain best practice underwriting standards and charged the high fees and high interest rates associated with the predatory lending in the lead up to the 2008 financial crisis.

In response to the vote, CRL president Mike Calhoun said:

Congress seems to have quickly forgotten the damage caused by predatory mortgage lending. The homeowners who lost their homes due to predatory loans have not.

It is hard to imagine a rationale for a return to the practices that brought on the financial crisis — the higher fees, inflated interest rates and weaker underwriting standards.

When the new rules were developed certain exceptions were granted for community banks. These small banks did not cause the crisis and have a closer connection to the places and the people they serve. This bill extends those targeted exceptions to all institutions. These include institutions that took advantage of loopholes in the old rules and pushed the predatory loans that sparked the crisis.

The new rules have made mortgages safer, more transparent and affordable. Since the rules went into effect last year, the housing market has continued a sustainable recovery. We should be thankful they have worked so well. Instead, this bill is a giveaway to some of the institutions that nearly destroyed our economy. It takes us in exactly the wrong direction.

For more information, or to arrange an interview with a CRL spokesperson on this issue, please contact Charlene Crowell at or 919-313-8523.