[Congressional Record Volume 155, Number 70 (Thursday, May 7, 2009)]
[Extensions of Remarks]
[Pages E1085-E1086]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             MORTGAGE REFORM AND ANTI-PREDATORY LENDING ACT

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                               speech of

                           HON. BOB ETHERIDGE

                           of north carolina

                    in the house of representatives

                         Wednesday, May 6, 2009

       The House in Committee of the Whole House on the State of 
     the Union had under consideration the bill (H.R. 1728) to 
     amend the Truth in Lending Act to reform consumer mortgage 
     practices and provide accountability for such practices, to 
     provide certain minimum standards for consumer mortgage 
     loans, and for other purposes:

  Mr. ETHERIDGE. Mr. Chair, I rise in support of H.R. 1728, Mortgage 
Reform and Anti-Predatory Lending Act.
  Our nation currently has the highest home foreclosure rate in a 
quarter century. Millions of families are facing the frightening 
prospect of foreclosure. Not only do these foreclosures cause great 
harm to individual families, but they result in declining property 
values for whole communities and huge disruptions in the overall 
housing market. This housing crisis has rippled through our economy and 
led to the economic recession in which we find ourselves. H.R. 1728 
makes the necessary reforms to prohibit many of the ill-advised 
practices that led to the housing crisis.
  H.R. 1728 includes several provisions to end abusive or predatory 
lending. This bill ends compensation structures that incentivize 
mortgage originators to steer borrowers into more costly loans. It also 
calls for increased disclosure so that consumers know if loan 
originators are benefiting at their expense. This bill creates uniform 
standards to prevent mortgage abuse. In order to meet these new 
standards, consumers would have to have a ``reasonable ability to 
repay.'' In addition, loan refinances would have to provide some ``net 
tangible benefit'' to the consumer. Meeting these new guidelines will 
help erase some of the riskier loans that have damaged our housing 
sector. Any lender that violates these standards would be liable for 
damages including attorney's fees. In addition, Federal financial 
regulators would also get new authority to address abusive mortgage 
practices by issuing joint regulations. Finally, H.R. 1728 protects 
tenants by providing them protections

[[Page E1086]]

and increased notification if the house they rent falls into 
foreclosure.
  Exotic derivatives markets based on mortgages were a primary 
contributor to our current economic downturn. This bill requires 
creditors retain at least five percent of the credit risk of each loan 
they transfer, or sell to a third party. Similarly, H.R. 1728 would 
ensure that the secondary market also comply with these new standards 
as they buy and trade these loans as securities. Sharing risk is an 
important part of ensuring safety in the marketplace.
  These reforms will help us rebuild our economy now, and help us avoid 
future mistakes like those that contributed to our current economic 
crisis. I support the Mortgage Reform and Anti-Predatory Lending Act, 
and I urge my colleagues to join me in voting for its passage.

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