Mortgage Reform and Anti-Predatory Lending Act
I would also like to recognize the leadership of Representative Mel Watt and Representative Brad Miller, who wrote this bill and who have been working towards reform of predatory lending practices since the last Congress.
I am especially appreciative for them working on concerns that I had about prepayment penalties and the way that they have resolved them, targeting the subprime market and phasing out those even in the prime market.
I am also appreciative for the work that they have done scaling back on any State preemption that was in the bill.
My California attorney general now supports the bill, and we are very appreciative for that.
This bill before us today will ensure that the subprime meltdown, which is causing 6,600 foreclosures each day, reducing the property values of 73 million homeowners, strangling the credit markets and crippling our largest financial institutions, will not happen again.
First, H.R. 1728 would ban the abusive compensation structures, such as yield-spread premiums, that create conflicts of interest or award originators that steer borrowers into loans that are not in their best interest. This protection is needed because many struggling homeowners, especially minority or low-income homeowners, were intentionally steered into high-cost mortgages by unscrupulous lenders and mortgage brokers.
Second, H.R. 1728 would require loan originators to hold at least 5 percent of the credit risk of each loan that is later sold or securitized by requiring lenders to have "skin in the game."
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