[Congressional Record Volume 155, Number 73 (Wednesday, May 13, 2009)]
[Extensions of Remarks]
[Pages E1131-E1132]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             MORTGAGE REFORM AND ANTI-PREDATORY LENDING ACT

                                 ______
                                 

                               speech of

                           HON. RUSH D. HOLT

                             of new jersey

                    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. HOLT. Mr. Chair, I rise today in support of the Mortgage Reform 
and Anti-Predatory Lending Act, H.R. 1728, and to commend my colleagues 
Brad Miller, Mel Watt and Chairman Frank for their leadership and hard 
work on this measure. I note that Rep. Miller has worked on this matter 
for years, long before it became such a consuming issue. I urge my 
colleagues to support it.
  A host of factors contributed to the economic crisis we have been 
suffering from over the past year, and it is fitting that the term 
``perfect storm'' has so often been used to describe it. But the 
abusive and predatory practices of certain mortgage lenders certainly 
are among the factors that top the list. Somewhere along the way, 
prudent business judgment and careful long-term risk assessment were 
muscled out of the way by short-term profit seeking, with no thought of 
the impact that would have on the broader economy in the long run. The 
end result: the highest rate of home foreclosures in a quarter of a 
century.
  Today, we take another important step in guiding our economy back 
towards its once stable footing, by prohibiting predatory lending and 
abusive lending practices, holding banks responsible for the home 
mortgages they issue, and protecting tenants whose residences go into 
foreclosure despite their own timely payment of rent.
  One of the most prevalent abuses by subprime loan originators has 
been the practice in which they steer prospective borrowers towards 
loans that will provide originators with the highest near-term payoff, 
sometimes through fees the broker or loan officer collects by directing 
borrowers towards those loans. The Mortgage Reform and Anti-Predatory 
Lending Act would prohibit mortgage brokers and bank officers from 
directing borrowers towards loans that will ultimately become more 
expensive than they can afford, and would mandate that lenders only 
issue loans that the borrowers can repay. In addition, it will require 
loan originators to disclose to borrowers any compensation they receive 
in connection with the mortgage transaction.
  One of the reasons loan originators have been unconcerned about 
issuing loans that they know borrowers might not be able to pay off is 
because loan originators in recent years have tended immediately to 
resell, or securitize, the mortgage loans they originate. Therefore, 
they only retained the risk associated with issuing an unstable loan 
for a brief period, and then the risk was transferred elsewhere. The 
Mortgage Reform and Anti-Predatory Lending Act calls for new 
regulations to require loan originators to retain at least a five 
percent interest in every loan they issue. Once they are required to 
retain some of the long-term risk of a borrower defaulting on the loan, 
the issuers should be expected to reinstate more prudent loan 
origination practices. In addition, the bill would hold the secondary 
mortgage market--the institutions that have been purchasing and 
securitizing mortgages--responsible for complying with the same 
standard when they purchase and package mortgages for resale.
  And the Mortgage Reform and Anti-Predatory Lending Act also includes 
important protections for some of the most innocent and vulnerable 
victims of the foreclosure crisis--namely, tenants who reliably pay 
their rent on time, but wind up homeless when their landlords fail to 
do the same with their mortgage payments, and their properties go into 
foreclosure. The bill would require that tenants in such circumstances 
receive adequate advance notice and are provided with an opportunity to 
relocate before the foreclosure is completed.
  The Mortgage Reform and Anti-Predatory Lending Act includes many 
important reforms and protections. I am pleased to support it and I 
urge my colleagues to do the same.

[[Page E1132]]



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