[Congressional Record Volume 154, Number 153 (Thursday, September 25, 2008)]
[Senate]
[Pages S9497-S9498]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BOND:
  S. 3581. A bill to establish a Federal Mortgage Origination 
Commission, and for other purposes; to the Committee on Banking, 
Housing, and Urban Affairs.
  Mr. BOND. Mr. President, today I am introducing a bill that goes to 
the heart of one of the major problems in our loan operations. We have 
had a system develop where no longer are loans just made available by 
the State-regulated banks and thrifts. Too many loan offers come over 
the Internet or by fax. I have not been able to develop a good enough 
screening program on my computer to keep them out. I know what kinds of 
solicitations are being made. They are being made by unregulated 
entities, people not subject to any regulation. As we say back home: We 
regulate the bricks but not the clicks. We regulate the banks and the 
savings and loans but not the people who offer you loans too good to be 
true by fax or Internet.
  Congress has already taken some steps to address the mortgage 
origination problem by developing a mortgage licensing and registry 
system through the Secure and Fair Enforcement for Mortgage Licensing 
Act of 2008 and protecting consumers by requiring greater mortgage loan 
disclosure requirements. In addition, I have worked with Senator Dodd, 
last year and this year, to include more housing counseling funding to 
assist homeowners. I strongly believe the Mortgage Origination 
Commission, proposed by the Secretary of the Treasury, is an important 
element to complement these efforts.
  As many of us know, the root cause of the current financial crisis is 
traced

[[Page S9498]]

to the breakdowns in the mortgage market, led by the high level of 
failures in subprime mortgages. These failures occurred due to many 
reasons, but one major reason was the loophole in the Government's 
oversight and regulatory system for mortgage origination. Specifically, 
many mortgage brokers with no or uneven regulatory oversight originated 
a substantial number of all housing mortgages and over half of all 
subprime mortgages.
  To help close regulatory loopholes in mortgage origination, my bill 
contains the key components recommended by the Treasury.
  First, this legislation creates a new Federal oversight entity called 
the Mortgage Origination Commission. The Commission would be led by a 
Presidentially appointed Director for a 5-year term who would chair a 
seven-member board comprised of the Federal Government's key financial 
regulators: the Federal Reserve, the Office of the Comptroller of the 
Currency, the Office of Thrift Supervision, the Federal Deposit 
Insurance Corporation, the National Credit Union Administration, and 
the Conference of State Bank Supervisors.
  Second, the Commission would be empowered to develop uniform minimum 
licensing qualification standards for State mortgage market 
participants. As laid out in the bill, these standards would include 
personal conduct and disciplinary history, minimum educational 
requirements, testing criteria and procedures, and appropriate license 
revocation standards. The Commission would also evaluate, rate, and 
report on the adequacy of each State's system for licensing and 
regulation.
  The bill retains State-level regulation of the mortgage origination 
process, but the new Federal Mortgage Origination Commission would 
ensure that the States have adequate protections in place and improve 
transparency in the mortgage origination process by providing 
information on the strength of each State's standards. The Commission 
will also provide transparency in the securities market by providing 
evaluations and ratings on mortgages.
  Finally, the bill clarifies the Federal Government's enforcement and 
examination responsibilities over mortgage origination companies. 
Specifically, the Federal Reserve and the Office of Thrift Supervision 
would have clear authority over mortgage originators that are 
affiliates of depository institutions with a federally regulated 
holding company. States would have clear authority to enforce Federal 
mortgage laws governing mortgage transactions involving mortgage 
originators.
  In formulating this legislation, my goal was to develop a proposal to 
provide more effective regulation, transparency, and oversight in a 
streamlined manner. This bill enhances the current structure without 
creating a major new Federal entity. If enacted, the Commission could 
be up and running in a relatively short time.
  As I said, the legislation mirrors the Secretary of Treasury's 
proposal, and it is intended to be part of the overall response. I look 
forward to working with my colleagues to achieve this. I know time is 
running short. I hope they will carefully consider this proposal and 
perhaps include it in the bill coming to us or in separate legislation.
                                 ______