[Congressional Record Volume 140, Number 33 (Tuesday, March 22, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: March 22, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                                S. 1275

 Mr. DURENBERGER. Mr. President, this past Thursday the Senate 
passed S. 1275, the Community Development, Credit Enhancement, and 
Regulatory Improvement Act of 1993.
  I congratulate my colleagues for approaching the issue of banking 
reform in a bipartisan manner. This bill will reduce the onerous burden 
of unnecessary paperwork and redtape for banking institutions, 
strengthen the small business and real estate lending markets through 
the securitization of loans, and increase the availability of credit in 
distressed communities. I strongly support these important reforms.
  However, I oppose the restrictions imposed on so-called high-cost 
mortgages. I share the concerns of those who seek to end the practice 
of reverse redlining by unscrupulous lenders who prey on 
unsophisticated borrowers. However, most lenders engaged in nonstandard 
mortgages provide essential alternative financial services for 
homeowners facing a short-term liquidity crisis.
  Individuals who are unable to make mortgage payments due to a short-
term financial crisis such as the loss of a business or a death in the 
family need the opportunity to get back on their feet. Unfortunately, 
due to numerous regulatory and practical restrictions, banks are unable 
to refinance a loan which is already delinquent. The only lenders who 
are willing and able to refinance the delinquent mortgage are those 
engaged in higher cost mortgages--mortgages with balloon payments, high 
interest rates, or related lending terms. By accepting these terms, the 
lender is compensated for the inherent risk that he or she accepts in 
making the loan and the borrower is able to keep his or her home. I do 
not call this usury; I call it opportunity.
  I regret that my colleague from Texas, Senator Gramm, was unable to 
offer his amendment which would have recognized the difference between 
a nonstandard mortgage and an unscrupulous loan. I urge the conference 
committee to retain financing options for individuals faced with 
temporary financing options for individuals faced with temporary 
financial hardships. In my judgement, as long as the terms of these 
mortgages are disclosed, these options must be preserved.

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