[Congressional Record Volume 153, Number 184 (Tuesday, December 4, 2007)]
[Extensions of Remarks]
[Pages E2487-E2488]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




         MORTGAGE REFORM AND ANTI-PREDATORY LENDING ACT OF 2007

                                 ______
                                 

                               speech of

                       HON. JANICE D. SCHAKOWSKY

                              of illinois

                    in the house of representatives

                      Thursday, November 15, 2007

       The House in Committee of the Whole House on the State of 
     the Union had under consideration the bill (H.R. 3915) to 
     amend the Truth in Lending Act to reform consumer mortgage 
     practices and provide accountability for such practices, to 
     establish licensing and registration requirements for 
     residential mortgage originators, to provide

[[Page E2488]]

     certain minimum standards for consumer mortgage loans, and 
     for other purposes.

  Ms. SCHAKOWSKY. Mr. Chairman, the time has come and gone for Congress 
to act to address the scourge of predatory lending. In the wake of the 
subprime mortgage crisis that is rocking the economy, an estimated two 
million Americans will face home foreclosures in the next two and a 
half years. These problems have caused the housing market to fall into 
its worst slump in 16 years.
  The bill we are considering today, H.R. 3915, the Mortgage Reform and 
Anti-Predatory Lending Act, takes important steps to ensure that the 
mortgage industry follows sound principles of consumer protection. Many 
of the foreclosures we have seen are the result of predatory practices, 
including ``redlining,'' poorly worded or confusing contracts, the 
steering of consumers to more expensive loan products, and mandating 
unfavorable terms that trap consumers into loans they cannot afford.
  The bill before us today begins to turn the tide. It includes 
provisions to ensure that borrowers can repay the loans they are sold 
and receive clear disclosures about the loans they are offered, and 
that mortgage bankers and bank loan officers are all licensed or 
registered. All of these consumer protections will improve the options 
available to Illinois residents who seek a mortgage from a licensed 
mortgage lender.
  However, while this bill represents a good start, I am concerned 
about Title II of the bill, which contains a state-law preemption 
provision that could weaken the value of the protections I've listed. I 
strongly believe that the laws that the Congress pass should be a 
floor, not a ceiling; we should not punish a State that may have 
stronger laws than what the Congress is able to craft. Illinois' 
licensed mortgage brokers and loan originators meet some of the 
Nation's highest standards, and it is time for Congress to make sure 
all mortgage lenders meet standards at least as high--not to punish my 
home state.
  The preemption provision eliminates the ability of a homeowner to 
raise state-law claims against the securitizer--or actual owner--of the 
loan. If homeowners cannot sue the owners of the loans, in many cases 
they will have no remedy available to them at all: in many cases the 
original issuers of the mortgage have sold the loan, gone bankrupt, or 
have gone out of business. While the owners of the loans have the 
assets to provide relief to many victimized consumers, by preempting 
state law this bill ties the hands of consumers to take action against 
them.
  I am also concerned that this language does little to address the 
higher rates caused by so-called ``yield spread premiums,'' which might 
more accurately be referred to as kickbacks. This practice, which 
allows the broker to charge a more expensive rate to the consumer than 
the broker paid for the loan and pocket the difference, has encouraged 
brokers to sell the most costly loans possible. This loophole has no 
doubt contributed to record numbers of foreclosures we have been 
seeing, and it should be closed.
  The mortgage crisis has been building and we must do everything we 
can to address its devastating impact, especially felt in states like 
Illinois, Ohio, and Michigan. I am glad that Chairman Frank has 
indicated that he will work to improve the bill, and I look forward to 
working with him to correct the bill's deficiencies and enact the 
strongest possible protections for homeowners and tenants who are 
facing financial calamity.

                          ____________________