"We commend the House of Representatives and the House Financial Services Committee Chairman Barney Frank, along with lead sponsors, Reps. Mel Watt and Brad Miller, on the passage of H.R. 1728, the Mortgage Reform and Anti-Predatory Lending Act. At its core, this legislation provides that mortgage lenders may only make mortgages that a consumer can afford to repay. While that might seem like basic common sense, today's mortgage crisis was caused by lenders making and refinancing loans with the sole goal of short-term gain rather than long-term sustainability.

"H.R. 1728 includes many protections that we believe are critical to restoring responsible lending. The bill will result in a number of badly-needed reforms:

  • Covers all loans in the mortgage market.
  • Bans the practice of paying brokers more to sell people a more expensive loan than they qualify for.
  • Provides incentives that are designed to encourage lenders to originate safe and sustainable mortgage products.
  • Bans all prepayment penalties on adjustable rate mortgages and establishes special rules for extremely high-cost mortgages.
  • Implements strong protections for renters, who are often unwitting victims of the crisis, and funds legal aid that will help homeowners who receive illegal loans.
  • Contains many helpful provisions to improve housing counseling, loan servicing, and the appraisal process.

"Unfortunately, despite its excellent substantive standards, H.R. 1728 does not sufficiently fix the misalignment of incentives throughout the mortgage market that led to the current crisis. Consequences for lenders who violate the new law need to be strengthened. Moreover, in some very important ways, the bill exempts from its scope those loans that have been bundled into mortgage-backed securities—the very loans that are proving most problematic as we try to address the foreclosure crisis.

Looking ahead, we urge the Senate to exert strong leadership as it begins its work on a mortgage reform bill to protect homebuyers from reckless lending in the future."

Kathleen Day at (202) 349-1871 or kathleen.day@responsiblelending.org; Ginna Green at (510) 379-5513 or ginna.green@responsiblelending.org; Charlene Crowell at (919) 313-8523 or charlene.crowell@responsiblelending.org

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