[Congressional Record (Bound Edition), Volume 155 (2009), Part 9]
[House]
[Pages 11741-11753]
[From the U.S. Government Publishing Office, www.gpo.gov]




             MORTGAGE REFORM AND ANTI-PREDATORY LENDING ACT

  The SPEAKER pro tempore (Ms. Pingree of Maine). Pursuant to House 
Resolution 400 and rule XVIII, the Chair declares the House in the 
Committee of the Whole House on the State of the Union for the 
consideration of the bill, H.R. 1728.

[[Page 11742]]



                              {time}  1120


                     In the Committee of the Whole

  Accordingly, the House resolved itself into the Committee of the 
Whole House on the State of the Union for the consideration of 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, with Mr. Ross in the chair.
  The Clerk read the title of the bill.
  The CHAIR. Pursuant to the rule, the bill is considered read the 
first time.
  The gentleman from North Carolina (Mr. Watt) and the gentleman from 
Texas (Mr. Neugebauer) each will control 30 minutes.
  The Chair recognizes the gentleman from North Carolina.
  Mr. WATT. Thank you, Mr. Chairman. I yield myself 5 minutes.
  Mr. Chairman, today could easily be a day toward a celebration for 
myself, as an original cosponsor of this bill, and Mr. Miller of North 
Carolina, my colleague, who also is an original cosponsor of this bill, 
perhaps leading to a celebration of final passage.
  But I approach this day with two rather major concerns about 
celebrating. First of all, I approach it asking: What if 6 years ago we 
had passed the legislation that Mr. Miller and I proposed to the House 
of Representatives at that time? Isn't it likely that the major 
meltdown in our credit system would not have occurred, and there's the 
prospect that had that not occurred, the major economic crisis in which 
our country finds itself now, trying to dig our way out, may also have 
been avoided.
  So the decisions that we make have consequences. They have had 
consequences to our credit markets and they have consequences going 
forward, and have had consequences to our economy.
  So this is not a day for celebration. If we pass the bill and the 
Senate passes the bill and it gets signed into law, we will always 
wonder what if we had done this when we originally brought forward the 
bill and dealt with the issue when it should have been dealt with.
  Second, my observation is that this has been a very difficult and 
delicate bill to balance because we have tried to, on the one hand, not 
to dry up the credit--the money that is out there to be in the market 
for lenders to make loans to potential homeowners and to current 
homeowners to refinance while, at the same time, cutting back on the 
abuses that took place in the marketplace that led to the credit crisis 
and the economic meltdown that I just described.
  Balancing those two interests has been difficult and, unfortunately, 
those interests were balanced inappropriately in the past because 
credit obviously was made too readily available to too many people who 
could not afford to pay it back, who are now in foreclosure 
proceedings, now in bankruptcies, and we are seeing the negative 
consequences of an unrestrained market.
  So, obviously, the balance was not drawn appropriately in the past, 
and now we face the argument from a number of my colleagues that, 
``Well, we can just leave this alone and let the market take care of 
itself and we shouldn't be doing anything.'' We're going to hear those 
arguments throughout today's general debate and, no doubt, on tomorrow 
when we start dealing with the amendment process.
  That's a laissez-faire attitude that I would remind my colleagues is 
the same laissez-faire attitude that we faced 6 years ago when we first 
introduced this bill which, I would suggest to you, if we had acted 
then, we wouldn't be here.
  I reserve the balance of my time.
  Mr. NEUGEBAUER. I think we will have a good debate today because it 
is not about not doing nothing, but it's about a difference of opinion 
of what the right thing to do is, because that's really, bottom line, 
what the American people want us to do.
  They want to have a good mortgage and they want the right to have a 
mortgage that works for them. I think that the Republicans will 
articulate that we want them to have those choices.
  It is now my pleasure to yield 3 minutes to the gentleman from New 
Jersey (Mr. Garrett).
  Mr. GARRETT of New Jersey. I thank the gentleman. A day of 
celebration for this bill? I don't think so. The gentleman from the 
other side of the aisle indicated that we are going to be advocating 
laissez-faire and do-nothing reform. I don't think so as well. And if 
you look back at the track record at committee, our side of the aisle, 
Republicans offered a number of amendments time and time again to try 
to improve this bill incrementally.
  If I remember correctly, the chairman and yourself voted against 
every single one of those amendments which would have improved that 
bill.
  Today is a day of uncertainty. It's uncertainty for the American 
family; the American worker, who can't pay their bills, uncertain 
whether they're going to pay their mortgage or their rent. They're 
uncertain whether they're going to have a job next week.
  It's a day of uncertainty for small businesses, whether they're going 
to be able to make payroll. It's uncertainty for the American public as 
they look at the wanton spending and debt that's coming out of this 
Capitol of Washington, D.C.
  It's a day of uncertainty for investors and Wall Street and business 
as they look at the rules being changed constantly, almost on a weekly 
basis, and they don't even know which way to go. And so they don't 
invest, they don't try to grow the economy, and that's why we're 
continuing with the recession that we're in right now.
  This underlying bill has a number of flaws in it. It has the right 
intent, and that's why we tried to amend it and make it better. But the 
flaws are egregious, and that's why I cannot support it.
  The idea, for example, that banks should have skin in the game is 
something that we all agree on. How they're doing in it the bill, 
unfortunately, is problematic in two areas: First of all, that the 
rules constantly change even as we go forward in the bill itself; 
secondly, the point that the language in the bill basically says that 
the other side of the aisle, the Democrats, don't care that they 
effectively would be crowding out part of the market that we need to 
grow.
  The small banks who may not be able to retain such a large portion on 
their balance sheet. They even testified in committee to that effect, 
that they don't know how this would apply to them and whether or not 
they might not be able to offer as many loans as they did in the past.
  So point two was that we have heard testimony that language like this 
would make it harder for people to get home loans and refinance. The 
first point was that it's changing the rules constantly.
  In the original draft of the bill, you said that we should set it all 
out in detail, that we should have 5 percent skin in the game and other 
criteria that was in there. But, at the last minute, they change it and 
say, ``No. Maybe under certain circumstances the regulators can change 
that.''
  Well, which is it? Wall Street, the investors want to know which way 
we're going to go. Is it this parameter or that parameter? That's, 
again, why our side of the aisle, as the ranking member indicated, we 
didn't have ``no ideas,'' or ``no solutions''; we had a solution to it.
  A number of us said let's strike that language. Let's turn it to the 
regulators. Let's actually do a little study here and see whether or 
not if we do these things, as some of us suggest, might actually do 
more harm than good.
  Not only as we suggest, but some of the experts suggested as well. As 
a matter of fact, the Fed basically said there would be unforeseen 
consequences if we go through with some of the language that we have in 
here.
  So it's not just this side of the aisle. It's not just us. It's the 
experts and Fed that say this bill is problematic and can cause real 
harm to the problem and the economy going forward.
  Mr. WATT. Mr. Chairman, I yield 5 minutes to the lead sponsor of this 
bill,

[[Page 11743]]

the gentleman from North Carolina (Mr. Miller).
  Mr. MILLER of North Carolina. The financial industry's explanation 
for our financial crisis is it was a weird, unpredictable combination 
of forces, this perfect storm of macroeconomic forces that no one could 
have seen coming. Who could have known that all this would happen is 
the way that many economists mock that argument.
  Mr. Chairman, I don't claim that I saw the whole financial crisis 
coming. I didn't know that these mortgages and subprime mortgages made 
in 2004 and 2006 would be as toxic as they have proven to be for the 
financial industry. But I knew that they were going to be toxic for 
homeowners, and I thought that was reason enough to do something.
  In 2003, I introduced legislation that would have prohibited many of 
the practices that have led us to where we are. Mr. Watt joined me 
then. Two years later, we introduced it again as Miller-Watt-Frank.
  So, yes, many on this side of the aisle have been worried about 
trying to do something about the toxic loans for a long time, perhaps 
not to protect Wall Street--it's pretty remarkable to hear the minority 
still defending or worrying about the poor, poor pitiful boys on Wall 
Street--but to protect consumers, to protect homeowners.
  We know what caused this crisis. We know what was in the loans in 
2004 to 2006. Subprime loans went in 2003 from being 8 percent of all 
mortgage loans to 28 percent in 2006. Many people should never have 
gotten any loan. They didn't qualify for any loan.
  Actually, a clear majority of the people who got subprime loans, 
qualified for prime loans. They put their trust in the wrong person, 
and their trust was betrayed. Ninety percent of those loans had an 
adjustable rate, with a quick adjustment after just 2 or 3 years. They 
were 2/28s or 3/27s.
  Typically, the teaser rate hovered around prime. It wasn't much of a 
bargain in the first place and, in many cases, was above prime, and 
then would go up with an average typical monthly increase in payment of 
30 to 50 percent.
  Seventy percent had prepayment penalties locking the borrowers in, 70 
percent were originated by brokers that the borrowers thought were 
looking after their interest. There was a grotesque asymmetry of 
information. That's what economists call it. What it means is the 
lenders were writing all the fine print. Their lawyers wrote all that 
they gave the borrowers to sign and then the borrowers were stuck with 
it.
  They were counting on someone who was actually being paid, the broker 
who was being paid by the lenders, to get them the worst loan possible, 
while they were telling the borrowers they're trying to find for them 
the best loan possible.
  Now, throughout that period, we heard the same arguments then that we 
are still hearing after all that has happened. We're still hearing from 
the minority in opposition to this bill that all those terms that may 
look predatory were actually justifiably required to make loans 
available to people who otherwise would not qualify, to make 
homeownership available.
  This is financial innovation. This is the market at its best. We 
should celebrate. And we know what really happened during that period.
  Americans have heard a great deal about the vulgar compensation on 
Wall Street in the financial industry: the pay and the bonuses and all 
the perks, the million dollar-plus redecorations of the CEO offices, 
the corporate jets, and all the rest. Even after all of that, more than 
40 percent of corporate profits in America were in the financial 
industry.
  Mr. Chairman, their margins weren't really that tight. They really 
didn't have to put all those terms in mortgages in order to make them. 
The terms that appear predatory on their face really were predatory. 
They were not about making loans available to people who otherwise 
couldn't get credit. They were about making as much money as they could 
as quickly as they could make it.
  We still hear the same arguments, the same parroted arguments from a 
discredited industry we have heard for years. We have heard letters 
from the mortgage bankers held up and read aloud as if they were 
brought down on stone tablets from Mount Sinai. We have heard the 
concerns of the Wall Street boys. Like everybody in America still 
believes what they have to say.
  It is very clear that the members of the minority's view of the role 
of government is that government should hold the American people while 
industry goes through their pockets.
  The mortgages that got us in this mess were shameful. It is shameful 
that this Congress, that this government ever allowed those mortgages 
to happen. This bill will begin to put an end to it, to make sure it 
never happens again. It limits the upfront costs that strip equity from 
mortgages. It prohibits a prepayment penalty that traps people in bad 
mortgages so they couldn't get out of them. It forbids compensation to 
brokers that creates the conflict of interest that many brokers 
betrayed the trust of borrowers.
  The CHAIR. The time of the gentleman has expired.
  Mr. WATT. I yield the gentleman an additional 2 minutes.
  Mr. MILLER of North Carolina. The arguments on the other side remain 
the same that they have been: ``Oh, this will narrow choices for 
consumers,'' like they are really protecting the rights of consumers to 
pick mortgages like that. Like borrowers came into brokers or mortgage 
companies and said, ``You know, can you get me an adjustable rate loan 
that goes up after 2 or 3 years and the monthly payment goes up 30 to 
40 percent, with a prepayment penalty so it's harder for me to get out 
and have to pay something to get out, with an initial rate that's 
probably only about prime in the first place? And because I'm paying 
more at a higher interest rate than I qualify for, how about paying 
some extra money to the broker?''
  Mr. Chairman, no one asked for these loans. They were duped into 
taking these loans.
  Ned Gramlich, a member of the Federal Reserve Board's Board of 
Governors said that, ``For all its work, subprime lending actually made 
sense and helped people get loans, but the practices were 
indefensible.'' He asked the rhetorical question, ``Why is it that the 
most complicated loans, the most complex loan terms, end up in loans to 
the most unsophisticated borrowers?''

                              {time}  1130

  He said the question answers itself: They were duped into taking 
these mortgages. This bill will keep that from happening again. It 
should never have happened before. This will keep it from happening 
again.
  Mr. NEUGEBAUER. Mr. Chairman, it is my pleasure now to yield 5 
minutes to the gentleman from Texas (Mr. Hensarling), who has been a 
strong advocate of making sure that Americans have plenty of 
opportunities and plenty of choices when they look at their financial 
products.
  Mr. HENSARLING. Mr. Chairman, I thank the gentleman for yielding.
  Mr. Chairman, this is a very, very serious topic. Unfortunately, it 
is being addressed with a very, very disappointing bill.
  I heard several of my colleagues on the other side of the aisle say 
this is all about protecting consumers. It is a piece of legislation, 
Mr. Chairman, which will protect them right out of their homes. I don't 
think that is the type of protection that the consumers or America are 
looking for.
  What this bill will do, if this Chamber passes this and ultimately if 
it is signed into law, it means the Federal Government will 
functionally be taking away homeownership opportunities from the 
American people. It will cause an increase in interest rates for people 
as they seek to either buy a home or keep the homes they have. It 
changes the rules to where once again those who follow the rules will 
end up having to bail out those who do not.
  Now, in the previous debate on the rule I heard the distinguished 
chairman of the full committee and others give us a history lesson 
about the cause, and it is important to learn the lessons of history. 
They were a whole lot less focused upon how this bill will impact the 
future.

[[Page 11744]]

  But if we actually look at our history lesson, there is no cause that 
looms larger--looms larger--in the mortgage crisis meltdown than the 
abuses of the government-sponsored enterprises, Fannie and Freddie, 
where government gave them a functional monopoly to go out, make 
profits that could not be achieved in a competitive market, and told 
them to finance loans to people who could not afford them.
  The demand for the subprime mortgage skyrocketed when Fannie and 
Freddie, the government-sponsored enterprises, demanded them. Many on 
the other side of the aisle wanted to roll the dice. Yes, the dice were 
rolled, and the American people lost.
  This is called the Mortgage Reform and Anti-Predatory Lending Act. 
There can be no mortgage reform, Mr. Chairman, without reforming Fannie 
and Freddie. And for those who claim that this has already been 
accomplished, well, now that they have been effectively nationalized, 
when their market share of new mortgages has gone from 50 percent to 
almost 90 percent, when the taxpayers are on the hook for hundreds and 
hundreds and hundreds of billions of dollars, which makes the bailout 
of AIG look cheap, I don't think this is reform, Mr. Chairman.
  With respect to the title of ``anti-predatory lending,'' the bill is 
almost completely silent on predatory borrowing. How can we take this 
as a serious piece of legislation, when we know that FinCEN, the 
Financial Crimes Enforcement Network, has said that over half of the 
mortgage fraud took place with borrowers, those who lied about their 
income, they lied about their wealth, they lied about their occupancy; 
yet, the bill is almost completely silent. It only says, oh, by the 
way, if you are caught defrauding your lender, we are not going to 
allow you to sue him.
  Otherwise, there is a complete explosion of liability exposure on the 
lender side. And we know what happens in lawsuit abuse, Mr. Chairman. 
It gets poked into the price of every single mortgage. People will pay 
higher mortgages.
  Right now, the plaintiffs' trial attorneys, I have no doubt, are 
licking their chops over this legislation. We have such nebulous terms 
as ``net tangible benefit,'' ``reasonable ability to repay.'' Well, 
what is the net tangible benefit? If somebody wants to refinance their 
home and update their kitchen, is that a net tangible benefit? Maybe it 
is. How about if they want to refinance their home to put in a swimming 
pool? Is that not a net tangible benefit?
  If there is somebody on the other side of the aisle who would answer 
those questions, I would be happy to yield time.
  Well, seeing none, I think that buttresses my point, Mr. Chairman, 
that nobody knows how to define these terms.
  So, ultimately what we are going to have are fewer mortgages being 
made. This is Uncle Sam telling you, with a couple of exceptions, if 
you can't qualify for a 30-year fixed mortgage, then we are going to 
deny you the homeownership opportunity in America, because we are 
smarter than you. We know better than you. We have to protect you from 
yourself.
  If we want true protection, we need effective disclosure. Mortgage 
fraud needs to be treated equally on the borrower's side and the 
lender's side. And at a time of a national credit crisis, we need to be 
finding ways to help the American families with more credit for their 
needs, not less.
  This bill needs to be rejected.
  Mr. WATT. Mr. Chairman, I yield 2 minutes to the gentleman from New 
Jersey (Mr. Pascrell).
  Mr. PASCRELL. Mr. Chairman, I hope folks are watching and listening. 
We had a debate on credit cards. You heard the debate last week. Now 
you know who is on the side of the consumer and who is dealing in 
gibberish.
  Secondly, we have a debate today on the Anti-Predatory Lending Act. 
There is no doubt about this. To insinuate that the primary problem is 
with those who borrow the money is outlandish and cannot be backed up 
with any data whatsoever. So I rise in strong support of H.R. 1728, 
which would curb the abusive and predatory lending that led directly to 
the subprime mortgage crisis and the recession we now face.
  I want to thank Chairman Frank for his hard work on this legislation. 
In my county of Passaic, New Jersey, one out of every 21 homes is in 
foreclosure.

                              {time}  1145

  In my hometown of Paterson, New Jersey, 2,700 mortgages are currently 
in default; that is one out of seven. And to hear the other side--or 
many on the other side, that is--is outlandish. You cannot support what 
you're talking about. My district office receives dozens of calls every 
day from my constituents who cannot pay their skyrocketing mortgages 
and fear imminent eviction.
  For years, as the housing bubble grew, unscrupulous brokers, in a 
quest for higher commissions and higher profits, preyed on the American 
Dream of homeowners by signing borrowers, many of them unqualified, up 
for risky, adjustable rate, subprime mortgages. That is what we are 
talking about today. That is what we are going to correct.
  Subprime, high-interest and high-fee mortgage lending grew from 8 
percent of the total mortgage lending in 2003 to 28 percent in 2006. 
Additionally, of the subprime mortgages originating in just 2004 to 
2006----
  The CHAIR. The gentleman's time has expired.
  Mr. WATT. I yield the gentleman an additional 30 seconds.
  Mr. PASCRELL.--in those 2 years, Mr. Chairman, 90 percent came with 
an exploding adjustable interest rate. How do you blame that on the 
borrowers? Seventy percent came with a prepayment penalty. How can you 
blame that on the borrowers? Seventy-five percent included no escrow 
for taxes and insurance, and over 40 percent were approved without 
fully documented income. They didn't ask it. They didn't even ask it. 
They are responsible to lenders.
  By 2007, according to the Joint Economic Committee, these subprime 
mortgages were being foreclosed at the rate of 10 times more than fixed 
rate mortgages.
  I hope we support this legislation, Mr. Chairman.
  Mr. NEUGEBAUER. Mr. Chairman, it is my honor now to yield 3 minutes 
to the gentleman from Minnesota (Mr. Paulsen).
  Mr. PAULSEN. I thank the gentleman for yielding.
  Mr. Chairman, this bill today has the word ``reform'' in it, the 
Mortgage ``Reform'' Act; but unfortunately, the reform that it is 
proposing would only further hurt the housing market and leave aspiring 
homebuyers with less choice, ultimately keeping them out of a new home. 
In short, this bill will do more harm than good.
  Rather than helping revive the economy, this bill will tie the hands 
of mortgage lenders and will do nothing to jump-start a flailing 
housing market. How can we expect more people to purchase more homes 
when we make it harder for them to get the mortgages that they need?
  Mr. Chairman, at a recent committee hearing on this bill I asked that 
very question to the director of consumer affairs at the Federal 
Reserve and also of the commissioner of banks for the Commonwealth of 
Massachusetts. Both of these expert testifiers said verbatim, they said 
unequivocally, that this legislation would in fact reduce the number of 
mortgages that are available to consumers.
  It is time for Congress to do a much better job of considering any 
unintended consequences of the legislation that it passes. That is why 
I offered an amendment to this bill that would require the Comptroller 
General to study the effect that this legislation will certainly have 
on the financial institutions that provide mortgages.
  But the reality is, this legislation here today, it still has too 
many problems. And the bill will now open up even safe mortgages to 
litigation by trial lawyers and activist groups. And now hardworking 
people that want to own a new home are going to have to pay the price 
in the form of higher mortgage interest rates. So this bill not only 
gives more opportunities for trial lawyers, it in fact is going to use

[[Page 11745]]

taxpayer money to subsidize those lawsuits, about $140 million of 
taxpayer money subsidizing lawsuits.
  Finally, this bill is called the Mortgage Reform bill, yet it 
contains no reform of Freddie Mac or Fannie Mae, which have left the 
taxpayers on the hook for billions and billions and billions of dollars 
because of bad mortgage underwriting practices.
  We should oppose this legislation. We should get it right. We should 
do nothing that is going to hurt the availability of mortgages, 
especially to first-time homebuyers. And hopefully we will move in a 
direction that is going to help not increase costs, but also make 
credit more available. So I would urge opposition to the bill.
  Mr. WATT. Mr. Chairman, I reserve the balance of my time in an effort 
to equalize the time.
  Mr. NEUGEBAUER. Mr. Chairman, I yield myself 3 minutes.
  The example I would use here today, imagine taking your car to the 
repair shop and saying, you know, my car is not running very well, it 
is running rough. And immediately the service attendant reaches over, 
pulls up your hood, and starts taking the engine out. And you stop and 
you say, wait a minute, what are you doing? And they say we are going 
to put a new engine in, you said your engine wasn't running correctly. 
That is before we did any diagnostic work to maybe determine whether it 
needed new spark plugs, or maybe it needed a new valve, or something 
like that.
  And, really, we have started down a road here. We have had one of the 
most robust housing finance systems in the world. It has been the envy 
of the world. It has allowed record levels of homeownership for 
American families. Yes, it is running a little rough right now and we 
will need to get to the bottom of that, we need to diagnose what those 
problems are. The Federal Reserve is going down that road; they have 
promulgated some new rules. We have said that now people who are going 
to originate mortgages are going to have to be registered.
  But the problem here is that my friends are going down the road here 
without really determining all the places in the engine that could be 
causing the engine not to run correctly, they want to put a new engine 
in there--an untested engine.
  Quite honestly, I spent a number of years in the housing business. I 
built houses, I made mortgage loans, I have borrowed money, I have 
originated mortgages. And one of the things I know is that not every 
mortgage fits every situation. A lot of people were able to enjoy the 
American Dream because they were able to get a mortgage tailored to 
their financial needs. What this bill does is says, you know what, the 
government is going to tell you what kind of mortgage you get. And if 
you don't take the government mortgage, it might not allow you to get 
the house that you want. It is like, not only is the government going 
to put a new engine in your car, but, by the way, the government says, 
scoot over, now we are going to drive.
  We have seen, in the last few months, a major government intervention 
into financial markets, into automobile companies, into insurance 
companies. Last week, we saw that the Federal Government is going to 
tell you what kind of credit card you get to have now. And now my 
colleagues on the other side want to tell you what kind of mortgage you 
get, which is going to tell you what kind of house you get. That is not 
the American Dream; that's the Government Dream. Quite honestly, my 
colleagues are dreaming if they think this is not going to increase the 
cost of mortgages for families all across the country.
  And you know what happens when you increase the cost of the mortgage? 
It reduces the affordability for those American families. That means 
many of them have to buy smaller houses, or, in some cases, many people 
are priced out of the housing market because they can't get the 
mortgage that meets their needs.
  Let's let the American people have a choice to do that. Let's stop 
and look and give the regulatory measures that have already been 
proposed by the Federal Reserve time to work. And let's make sure that 
we are fixing the things that are broken before we throw out the whole 
engine and leave Americans without the ability to be able to have 
affordable mortgages and afford the American Dream.
  Mr. Chairman, I reserve the balance of my time.
  Mr. WATT. Mr. Chairman, I yield 3 minutes to the Chair of the Capital 
Markets Subcommittee of Financial Services, the subcommittee that has 
responsibility for making sure that there is money available, the 
gentleman from Pennsylvania (Mr. Kanjorski).
  Mr. KANJORSKI. Mr. Chairman, I rise in support of H.R. 1728, the 
Mortgage Reform and Anti-Predatory Lending Act. This bill aims to 
significantly reform mortgage lending and better protect borrowers. I 
have worked on these issues for some time.
  On that point, listening to the little debate before me, I am just 
absolutely amazed. Apparently, my friends on the other side of the 
aisle think we are rushing to judgment here and acting precipitously on 
a bill that is not quite ready to be completed or concluded. I would 
like to call their attention to the record.
  I held hearings in the Poconos, in my congressional district, on 
predatory lending more than 5 years ago. We came back and prepared 
legislation--I may say bipartisan legislation--in predatory lending 4 
years ago. It didn't succeed in passing, but in 2007, we put together 
and introduced another piece of legislation, a predatory lending bill, 
that encompasses many of the issues that are encompassed in this bill. 
That failed to get any action in the Senate, but did pass the House.
  I don't know how long we want to wait, in all honesty, on packaging 
and passing a new mortgage reform and antipredatory lending bill. Yes, 
we will stop too many loans that are bad from being made. Yes, we will 
discourage forms of loans that have caused us trouble in our system and 
have almost brought down our system. This is the beginning of many 
things that are necessary for this Congress to do to straighten out the 
economic woes of this country.
  The predatory lending problems that we have encountered in my State 
of Pennsylvania convinced me that we need to update the Federal law, 
and they convince me of that fact today. I, therefore, previously 
introduced legislation and have participated. And today, I would like 
to focus my comments on that part of the bill that is taken from a bill 
that I prepared over the last 7 years, and that is primarily the 
appraisal package of this bill.
  For the first time, we have established real standards. For the first 
time, we have geared up and provided payoff statements, we have 
provided information to the purchaser and to the entire market--and 
most of all to the lender--that we are not going to have favorite 
appraisers, we are not going to have preselected appraisers, we are 
going to have honest, independent appraisers. That is what this bill 
calls for.
  I think that if you take the bill in its entirety--and none of us, 
including myself, agree with every element or every part of the bill, 
some of it is quite onerous, quite frankly, but the fact of the matter 
is what we have done here today for the first time is create a bill 
that those of us that do not want predatory lending in this country, 
who want to have fair and honest mortgaging in this country, and want 
to attend to the economic problems of this country should adopt and 
pass this bill.
  Mr. NEUGEBAUER. Mr. Chairman, it is my pleasure now to yield 5 
minutes to the ranking member of the full committee, the gentleman from 
Alabama (Mr. Bachus).
  Mr. BACHUS. Mr. Chairman, and Members of the body, this discussion is 
a discussion that has been going on for 5 or 6 years. In fact, it 
predates that.
  In 1999, this body discussed the fact that Freddie and Fannie were 
being pushed into making loans without a down payment. And the New York 
Times, in an article in September, 1999, actually quoted Peter Wallison 
as saying that you are not requiring a down payment, and now the 
Clinton administration is pushing Freddie and Fannie

[[Page 11746]]

to lower the credit standards. And he makes the statement in there 
that, if they fail, the government will have to step in and bail them 
out the way it stepped up and bailed out the thrift industry. In 2005, 
I made another statement that some people considered wild-eyed, and I 
said that if we don't reform the subprime lending market, we are going 
to have a similar situation that we faced with subprime lending.
  Mr. Kanjorski, listening to him reminded me that he and I pretty 
much, I thought, put together a bill--or he said bipartisan 
legislation, what he was talking about is, we were drafting it, and 
Chairman Frank was working on it. And I actually made the statement in 
2005, and I will read my statement: ``Uniform standards in the 
marketplace are essential if the primary and secondary markets are to 
continue to serve as a vital source of liquidity to make mortgages 
available to homebuyers with less than perfect credit. I am committed 
to finding ways to end predatory lending while also preserving and 
promoting access for all homeowners to affordable credit.'' That was in 
May of 2005.
  Chairman Frank said--and I think said accurately--earlier on the 
floor that he and I came awfully close to a consensus in 2005 for a 
bill. I don't, quite frankly, know what happened. I am reading a 
Charlotte Observer statement, and I know Mr. Miller was concerned about 
putting some things in the bill that even some Democrat legislators 
objected to and I felt would limit access to credit. It is striking 
that I look at this House bill, 1728, and I will say this, Mr. Miller 
and Mr. Watt, this is essentially what you were advocating back in 
2005. But at that time, I thought there was a bipartisan feeling--that 
I actually submitted in draft form--that didn't contain some of these 
things. Because I really sincerely believe that you will eliminate many 
worthy borrowers with this legislation because it is almost a one-size-
fits-all.

                              {time}  1200

  There's going to be a lot of loans that could be made and people 
could buy a home, and that's a delicate balance. That's a balance we 
obviously violated throughout the 1990s by putting people in homes that 
shouldn't be there. And Mr. Miller, I think, and Mr. Watt have argued 
that if they have to pay a certain price, it just won't work, and many 
of my Republican colleagues agree to that. And as I said, I submitted 
draft legislation for consideration, but we couldn't get there.
  If you will recall, the other body said they were not going to take a 
provision on securitization. They weren't going to take it. And here we 
are today, 4 years later, and we all agree that there needs to be skin 
in the game, but this legislation before us is not the legislation that 
Mr. Kanjorski has talked about that I was ready to move in 2005 or 
2006, that Mr. Frank talked about, and it was essentially the 
legislation of Mr. Watt. I believe it was wrong then; I believe it's 
wrong now.
  The Acting CHAIR (Mr. Pastor of Arizona). The time of the gentleman 
has expired.
  Mr. NEUGEBAUER. I yield the gentleman an additional minute.
  Mr. BACHUS. Let me tell you what I believe, and I believe Mr. Watt 
and Mr. Miller are sincere. According to the Charlotte Observer, we 
were close to an agreement. I have no idea what happened.
  But let's talk about today. Let's talk about today, and let's assume 
and I assume, and I think I'm right, that we have all been very 
concerned about this. The legislation today, I think all the testimony 
in the hearings has been that poor origination standards plagued the 
mortgage industry and we need origination reform. We did something last 
year. We started proposing in 2005 registration of all brokers.
  The Acting CHAIR. The time of the gentleman has again expired.
  Mr. NEUGEBAUER. I yield the gentleman an additional 2 minutes.
  Mr. BACHUS. To register all mortgage originators, and that has been a 
tremendous success. We have got a lot of people committing fraud in 
starting those loans, and I think we are putting an end to that through 
legislation.
  We need to work on something else, and I think we all agree. I have 
an amendment that I'm going to the Rules Committee to propose, and I 
think there are some Democratic amendments. There are now people coming 
in and promising people they'll work out these foreclosures, and they 
are defrauding people who are actually going through a foreclosure, 
which is outrageous; and this bill needs a strong provision on that.
  But here's what it doesn't do: Chairman Frank and I supported in the 
last Congress H.R. 3915. Look at that bill and look at this bill. That 
included licensing and registration of originators as the first title. 
That's what I had proposed. The Senator from California proposed a 
similar thing and introduced it in the Senate. I introduced it in the 
House. That's now passed. It was approved by a large bipartisan 
majority.
  But H.R. 1728, the bill before us, it strikes a far different 
balance, and I believe it's one that will undermine the mortgage market 
at the worst possible time. We are just starting to see preliminary 
signs of a possible housing recovery. Look at the numbers. Loans are 
being made. But H.R. 1728, the bill before us, it lacks clarity needed 
to provide, I think, meaningful protection to consumers. That was the 
testimony in the hearings from a coalition of consumer advocacy groups 
and labor groups. It manages to punish both responsible industry 
participants and worthy borrowers at the same time.
  The Acting CHAIR. The time of the gentleman has again expired.
  Mr. NEUGEBAUER. I yield the gentleman an additional minute.
  Mr. BACHUS. I am going to go fairly quickly, Mr. Chairman.
  Rather than focusing on basic underwriting standards we were doing in 
2005 and 2006 and in Chairman Frank's bill last year, we are not doing 
that anymore. Now, part of that is the Federal Reserve has adopted 
comprehensive antipredatory lending regulations. Mr. Garrett mentioned 
that. And those are going forward, and it's almost like this bill 
doesn't realize what has happened over the last year or two. It will 
expose the mortgage financial industry to substantial litigation risk. 
There was plenty of testimony on that. The cost of these inevitable 
lawsuits are going to be passed on to consumers.
  I actually proposed in my draft an individual right of action if 
people violated the standards that we were close to agreeing to. Many 
lenders have said they'll stop offering certain mortgage products that 
people are taking now. They're successful in paying them back.
  The Acting CHAIR. The time of the gentleman has again expired.
  Mr. NEUGEBAUER. I yield the gentleman an additional 1 minute.
  Mr. BACHUS. Consumer advocates, Federal regulators, Members on both 
sides of the aisle expressed reservation on the bill before us. Margot 
Saunders, and I'm going to quote here again, National Consumer Law 
Center, we worked with her, the gentleman from North Carolina and I, on 
trying to fashion a bill. She was for the bill last year. She says that 
this bill is ``convoluted and virtually impossible as a mechanism to 
solve the current problem.'' Now, she was testifying on behalf of a 
coalition of consumer advocacy groups.
  The administration is working out a plan right now to resolve 
troubled mortgages, and we shouldn't make it more difficult for worthy 
borrowers to get home loans while they're doing that. A ``yes'' vote 
will do exactly that. It will raise the cost of mortgage credit, limit 
the availability to millions of Americans. It won't give the certainty 
that our mortgage market needs. It's poorly crafted and ill defined.
  Mr. WATT. Mr. Chairman, I yield 2 minutes to the gentlewoman from 
Illinois (Ms. Schakowsky).
  Ms. SCHAKOWSKY. I thank the gentleman for yielding to me.
  Mr. Chairman, I rise today in strong support of the Mortgage Reform 
and Anti-Predatory Lending Act.
  According to a recent report, foreclosures in Chicago doubled from 
2006 to 2008 and continue today. It was Chicago's 50th Ward, a solidly 
middle class community where I grew up, that saw

[[Page 11747]]

the highest increases in foreclosures, 360 percent in just 2 years.
  When most people walk into a mortgage closing, they bring with them 
the hopes and dreams of their futures and those of their children and 
the full intention of being responsible homeowners. But actions by 
unscrupulous and downright predatory lenders put many Americans into 
loans that they couldn't afford, and the consequences are clear.
  This bill offers protections for homebuyers that are long overdue. 
I'm one of many to have worked for years on this issue, including our 
late and beloved Stephanie Tubbs Jones. We wrote legislation that would 
stop predatory lending in the mortgage industry, including requiring 
certification of brokers and enactment of basic consumer protections. 
And this critical bill builds on those efforts to create standards for 
lenders and mortgagers.
  I'm also pleased that this measure includes Mr. Ellison's bill to 
provide additional protection for tenants of foreclosed property. The 
foreclosure crisis for renters has been mostly a hidden consequence, 
but in States like Illinois, New York, Nevada, foreclosures on rental 
properties have represented nearly half of all foreclosures, uprooting 
families and wreaking havoc on communities.
  I want to thank Chairman Frank and Mr. Watt and Mr. Miller, and I 
urge all my colleagues to support swift passage of this measure.
  Mr. NEUGEBAUER. Mr. Chairman, I reserve the balance of my time.
  Mr. WATT. Mr. Chairman, I yield 2 minutes to the gentlewoman from 
Illinois, a member of the committee, (Ms. Bean).
  Ms. BEAN. I thank the gentleman for yielding.
  Mr. Chairman, I rise today to urge my colleagues to support H.R. 
1728.
  As an original cosponsor, I want to commend Chairman Frank for his 
leadership and also thank Mr. Watt for working with Congressman Castle 
and me to refine the qualified mortgage safe harbor to ensure that 
traditionally safe, stable loans are included.
  Today's bill follows up on the important work this House did early 
last Congress. Unfortunately, despite the strong bipartisan support of 
that bill, the Senate failed to act. I am hopeful that this year's bill 
will more swiftly move through the Senate and to the President's desk 
for signing into law.
  H.R. 1728 brings mortgage lending back to reality. It will ensure 
that mortgages are fully underwritten, income is properly documented, 
and borrowers have the ability to make their payments.
  The subprime mortgage crisis that we continue to deal with today 
wouldn't have happened if we had not relaxed bedrock principles of 
sound lending and underwriting. The bill requires lenders to keep some 
skin in the game for the loans they originate by requiring them to 
retain 5 percent of the loan value when they seek to securitize a 
mortgage in the secondary market. This concept of risk retention was 
endorsed by the New Dem Coalition as part of our Reg Reform Principles 
in February of this year, and we're pleased to see it included in the 
bill.
  I'm also pleased that it maintains a provision I wrote last Congress 
regarding the disclosure of negative amortization loans. Negative 
amortization occurs when unpaid interest gets added to the principal 
balance of a loan. Some borrowers enter into products with negative 
amortization not realizing that they're adding to the cost of their 
mortgage each month instead of paying principal down. The underlying 
bill requires lenders to disclose to borrowers if their loans allow the 
practice and requires credit counseling from a HUD-certified credit 
counseling agency for first-time borrowers considering such a loan.
  All of our constituents want better consumer protections and simpler 
disclosure of mortgage terms. They want homeownership to mean qualified 
borrowers make their payments, build equity, and keep their homes.
  I urge my colleagues to support it.
  Mr. NEUGEBAUER. Mr. Chairman, I yield myself 2 minutes.
  Mr. Chairman, I don't think that there's any disagreement in this 
House, and certainly not on our side, that predatory lending is bad, 
and we have taken steps to do that. The Fed has taken steps to do that. 
We want to make sure that people have the right choice of mortgage to 
be able to take a mortgage out that allows them to own a home.
  The problem with this bill is that it really starts to mess up the 
conduit of how mortgages are made. And a little bit of history on that 
is a mortgage is made in your local bank or a mortgage banking company. 
It is then sold into the secondary market. Investors buy those 
mortgages so that those banks and mortgage companies can originate more 
loans, and that's how we have built this great housing market in this 
country.
  What this bill does is it begins to put liability and uncertainty at 
a time there's already a tremendous amount of uncertainty in the 
secondary market. In fact, the secondary market in this country right 
now is shut down because of uncertainty, and now we want to dump a 
whole bunch or more of contingent liability and uncertainty on the 
secondary market to the point where I'm not sure whether we'll ever be 
able to start that engine.
  So what I think what our colleagues are trying to do is to say 
somehow that Republicans are not against the predatory lending. Of 
course we're against predatory lending, and steps have been taken. But 
what we are for is making sure that there is a mortgage market left 
when this all blows over. Yes, the market has had a hiccup and people 
are now trying to ascertain what the new rules are going to be. They've 
seen the government take over banks and get involved in all kinds of 
businesses. So there is a lot of uncertainty out there. And the 
question is, was a lot of this a lack of oversight or was it a lack of 
a bunch of regulations? I would submit in many cases this was a case 
where there was not appropriate oversight.
  The Acting CHAIR. The time of the gentleman has expired.
  Mr. NEUGEBAUER. I yield myself an additional minute.

                              {time}  1215

  And so now worse, because before we really check and see whether the 
oversight was being done appropriately, we are going to dump a bunch of 
regulation on the marketplace, the very fragile marketplace, financial 
marketplace right now, which was the source of funds for mortgages that 
allowed many people to have homes.
  Now, some of these loans, quote, that were subprime, were not all 
predatory. And I think one of the things that we have done, we have 
lumped two things in there. Some of those subprime loans were not to 
normal underwriting standards but they were tailored so that that 
person could buy a home. You know what, Mr. Chairman, a number of those 
people still are in those homes and making those payments.
  And now we are going to take this category of a broad blanket, of 
throwing the big blanket over the whole mortgage market and saying, you 
know, it was predatory. But that's not the case.
  We ought to take thoughtful consideration about what we are doing to 
this secondary market because we are going to dry up mortgage funds for 
American families.
  I reserve the balance of my time.
  Mr. WATT. Mr. Chairman, would you advise how much time remains on 
each side.
  The Acting CHAIR. The gentleman from North Carolina has 9 minutes, 
and the gentleman from Texas has 3 minutes.
  Mr. WATT. Mr. Chairman, I yield 2 minutes to a valued member of the 
Committee on Financial Services who has been involved in the process 
throughout, Mr. Al Green of Texas.
  Mr. AL GREEN of Texas. I thank the chairpersons for the stellar job 
that they have done. I especially thank you, Mr. Frank, for the fine 
work that you have done in leading us.
  Mr. Chairman, this is not just a good deal, it really is a great 
piece of legislation. Because after the exotic products that were 
placed in the marketplace--3/27s, 3 years of fixed rates, 27

[[Page 11748]]

years of variable rates, 2/28s, prepayment penalties that coincided 
with teaser rates--after these exotic products, this bill is necessary. 
This bill addresses these exotic products. It makes sure that lenders 
are making loans to people who can afford the loans, they can afford to 
pay the loans back. A relationship between borrower and lender was 
fractured.
  This bill seeks to restore that relationship, but it does something 
else that is exceedingly important, and it was mentioned very briefly. 
It addresses the concerns of people who are paying their rent. Their 
rent is paid and they find themselves being evicted because the 
property they are living in is being foreclosed on.
  The foreclosure was no fault of the tenant, yet the tenant now has to 
move away from the school that the child attends. They have to move 
from the job where they work, the community that they reside in, simply 
because the owner was foreclosed on, and the tenant did not have 
anything to do with the foreclosure.
  This bill addresses it. It gives either a fair amount of notice or it 
allows the tenant to continue with the lease that has been in place. 
This is a good piece of legislation.
  I am going to ask that all of my colleagues please support it. Mr. 
Watt, I thank you for the fine job you have done. Chairwoman Waters, I 
thank you for the fine job that you have done. I beg that that 
legislation pass.
  Mr. NEUGEBAUER. I reserve the balance of my time.
  Mr. WATT. Mr. Chairman, I yield 2 minutes to the gentlelady from 
California, chairwoman of the Housing Subcommittee of Financial 
Services, Ms. Waters.
  Ms. WATERS. Mr. Chairman, I rise today in strong support of H.R. 
1728, the Mortgage Reform and Anti-Predatory Lending Act of 2009. I 
would like to thank Financial Services Committee Chairman Barney Frank 
for his commitment to bringing this legislation to the House floor.
  I would also like to recognize the leadership of Representative Mel 
Watt and Representative Brad Miller, who wrote this bill and who have 
been working towards reform of predatory lending practices since the 
last Congress.
  I am especially appreciative for them working on concerns that I had 
about prepayment penalties and the way that they have resolved them, 
targeting the subprime market and phasing out those even in the prime 
market.
  I am also appreciative for the work that they have done scaling back 
on any State preemption that was in the bill.
  My California attorney general now supports the bill, and we are very 
appreciative for that.
  This bill before us today will ensure that the subprime meltdown, 
which is causing 6,600 foreclosures each day, reducing the property 
values of 73 million homeowners, strangling the credit markets and 
crippling our largest financial institutions, will not happen again.
  First, H.R. 1728 would ban the abusive compensation structures, such 
as yield-spread premiums, that create conflicts of interest or award 
originators that steer borrowers into loans that are not in their best 
interest. This protection is needed because many struggling homeowners, 
especially minority or low-income homeowners, were intentionally 
steered into high-cost mortgages by unscrupulous lenders and mortgage 
brokers.
  Second, H.R. 1728 would require loan originators to hold at least 5 
percent of the credit risk of each loan that is later sold or 
securitized by requiring lenders to have ``skin in the game.''
  H.R. 1728 is a good bill. I would ask my colleagues to support this 
legislation.
  Mr. NEUGEBAUER. It is my pleasure to yield 2 minutes to the 
gentlewoman from Illinois (Mrs. Biggert).
  Mrs. BIGGERT. I thank the gentleman for yielding.
  Mr. Chairman, I would like to thank Chairman Frank and my colleagues 
from both sides of the aisle for working with me on this bill to 
improve it.
  Too many Americans are losing their homes. Some fell victim to 
unscrupulous practices and fraudsters. Some got into a loan they 
couldn't afford, and others are subject to traditional reasons for 
foreclosure. But this bill attempts to get at some of the root causes 
of these nontraditional reasons homeowners get into trouble, but by no 
means is it a finished product.
  For example, regulators testified that they don't know how the risk 
retention or ``skin in the game'' provision would work, so I think this 
provision needs to be better understood before becoming law. Also 
needing work is a provision that classifies new kinds of mortgages as 
subprime and unnecessarily replicates the Federal Reserve's new 
regulations set to take effect in October.
  And yet a third provision of this bill perhaps too narrowly defines 
which mortgages qualify for a safe harbor, which could result in an 
uptick in unfounded lawsuits and fewer options for creditworthy 
borrowers. It's important that we ``do no harm'' and carefully craft 
provisions that won't hamper our efforts to jump-start and restore our 
confidence to the housing market.
  At the same time, this bill does have some good provisions. Identical 
to a housing bill I have, title 4 expands HUD's coordination and 
capacity to offer grants to States and local agencies, which are at the 
forefront of helping homeowners.
  Section 106, which I authored with Congressman Hinojosa and 
Congressman Neugebauer, temporarily suspends HUD's new RESPA 
regulations and requires HUD to coordinate with the Fed to update 
mortgage disclosure regulations. Last August, HUD ignored a letter 
signed by 244 Members of this body requesting that the two agencies 
work together, so section 106 will require it.
  One of the major actors undermining the housing market is appraisal 
fraud. Titles 5 and 6, which I worked on with Congressman Kanjorski, 
will improve the integrity.
  Mr. WATT. Mr. Chairman, I yield myself 1 minute.
  Mr. Chairman, my colleague from North Carolina identified a whole 
list of things that had gone awry in the lending community that formed 
the basis for this bill, and we have tried to address them by requiring 
lenders to assess the borrower's ability to repay the loan by requiring 
borrowers to at least make sure that the lender is getting some kind of 
tangible benefit out of a loan that they make to them, by requiring 
lenders to verify the income of people that they are making loans to, 
and by setting up standards for appraisers to do responsible appraising 
and by creating broker responsibilities.
  Nobody can argue with those things and nobody should argue with those 
things. And if you support them, you should be supporting this bill.
  I reserve the balance of my time.
  Mr. NEUGEBAUER. I would ask the gentleman, does he have any 
additional speakers?
  Mr. WATT. We have a closing speaker. So if the gentleman is ready to 
close, he can go ahead, and we have one more speaker.
  Mr. NEUGEBAUER. Thank you.
  Mr. Chairman, Republicans are for good disclosure, open disclosure, 
easy-to-read disclosure. We are for responsible lending. We are also 
for making sure that the American people have low-cost mortgage 
choices.
  What we are not for is a legislation that limits those choices, that 
chokes a very fragile credit market and increases the cost of credit 
for American families all across this country.
  One of the things that is most important to American families today 
is, you know, the cash flow piece of it. And what we are going to do 
now is put so many restrictions on this market that people are going to 
build into that a cost for mortgages, and so mortgage rates are going 
to go up, choices are going to go down.
  And with this legislation, I am afraid we may never see a secondary 
market that was as good and as fruitful for mortgage lending as the 
previous one we had. That's the reason I am going to encourage my 
colleagues to vote ``no'' on this legislation. We can do better than 
that. We do not have to shut down the mortgage market, but we can make 
for responsible lending.

[[Page 11749]]


  Mr. WATT. Mr. Chairman, I recognize the chairman of the full 
Financial Services Committee for a closing statement and yield him the 
balance of our time.
  Mr. FRANK of Massachusetts. Mr. Chairman, I would say this: I note my 
Republican friends tell me they are opposed to predatory lending. At no 
point, however, have they taken any initiative in bringing any 
legislation to the floor to deal with it or to urge that it be done in 
a regulatory way.
  For 12 years they were in control, not a single bill came forward. My 
friend from Alabama did have a sincere interest here, and he had a good 
proposal. It wasn't until the Democrats were in the majority and we 
brought a bill to the floor that he was able to offer his bill, which 
we embraced. And even then, while he voted for the final bill, two-
thirds of his colleagues voted ``no.''
  Now, some have said this is going to do terrible damage to the 
mortgage market. I think Members would agree that no organization is 
more interested in having that well functioning than the National 
Association of Realtors.
  Mr. Chairman, I submit for the Record a letter from the National 
Association of Realtors dated May 5, 2009.


                             National Association of Realtors,

                                      Washington, DC, May 5, 2009.
     House of Representatives,
     Washington, DC.
       Dear Representative: On behalf of the 1.2 million members 
     of the National Association of REALTORS (NAR), their 
     affiliates, and property owners, I strongly urge Congress to 
     vote ``yes'' on H.R. 1728, the ``Mortgage Reform and Anti-
     Predatory Lending Act of 2009''.
       REALTORS are acutely aware that there is a need for 
     mortgage reform, and NAR believes that H.R. 1728 strikes an 
     appropriate balance between safeguarding the consumer and 
     making sure consumers have access to mortgages at a 
     reasonable cost. NAR is a strong advocate of protections for 
     consumers in the mortgage transaction, and REALTORS support 
     the general principle that all mortgage originators should 
     act in good faith and with fair dealings in a transaction, as 
     well as treat all parties honestly.
       REALTORS have a strong stake in preventing abusive lending 
     because it erodes confidence in the Nation's housing system, 
     and citizens of communities, including real estate 
     professionals, are harmed whenever abusive lending strips 
     equity from homeowners. As consumer abuse in mortgage lending 
     increased, REALTORS sought to protect consumers and the 
     housing market by establishing a set of ``Responsible Lending 
     Principles'' that form the basis for our advocacy with 
     Congress. Since their creation in 2005, REALTORS have shared 
     these principles with Congress during discussions of current 
     and past anti-predatory lending legislation. NAR is extremely 
     pleased that H.R. 1728 embodies the REALTORS ``Responsible 
     Lending Principles''.
       Therefore, NAR strongly supports H.R. 1728, and asks that 
     you indicate to consumers and the housing market your support 
     for them by voting ``yes'' for this legislation. I thank you 
     for the opportunity to voice our support for H.R. 1728. And 
     as always, NAR remains at the call of Congress, and our 
     industry partners, to help in the recovery of the housing 
     market and the overall economy.
           Sincerely,

                                  Charles McMillan, CIPS, GRI,

                                                   2009 President,
                                National Association of REALTORS.

  The National Association of Realtors strongly urges people to vote 
for this. The National Association of Realtors--knowledgeable and 
committed to homeownership--strongly supports this.
  My friend from Alabama alluded to some consumer groups, labor groups 
that had some problems. They have since largely been alleviated. I must 
say, if we would alleviate them further, he would hate the bill more. 
But the fact is that the groups he alluded to are, on the whole, 
pleased with the bill now.
  But, finally, I want to address the question of Fannie Mae and 
Freddie Mac. My colleagues have said, well, how can you do this without 
Fannie Mae and Freddie Mac legislation? Again, during the 12 years of 
the Republican rule, no bill passed for Fannie Mae and Freddie Mac and 
became law. In our 2 years, one did.
  Yes, I think further action is needed there. Where is their bill, Mr. 
Chairman? No Republican has offered, in the 2 years that I am aware of, 
as an amendment to this--or in any way--that bill. So they say you 
can't do predatory until you do Fannie Mae and Freddie Mac. They 
offered no such amendment. So it simply becomes as an excuse not to do 
things.
  Now let's talk about Fannie Mae and Freddie Mac and who is 
responsible for what. There have been some quotes. Let me quote from 
here.
  ``In 2004,'' Bush administration, Republicans in Congress, ``the 
Department of Housing and Urban Development revised these goals, 
increasing them to 56 percent of their overall mortgage purchases by 
2008, and additionally mandated that 12 percent of all mortgage 
purchases by Fannie Mae and Freddie Mac be `special affordable' loans 
made to borrowers with incomes less than 60 percent of an area's median 
income.''
  In 2004, the Bush administration mandates this. This is under 
Republican control.
  Then, let me go to line 20 on page 183. ``After this authorization to 
purchase subprime securities,'' which had come from the Clinton 
administration in 1995, ``subprime and near-prime loans increased from 
9 percent of securitized mortgages in 2001 to 40 percent in 2006,'' 
during the Bush administration.
  Yes, there was a great explosion in subprime mortgages brought by 
Fannie Mae and Freddie Mac and, in general, under the Bush 
administration. Earlier in that decade, I said I didn't think Fannie 
Mae and Freddie Mac were in crisis.
  By 2004, I agreed that they were pushed, in part, by the Bush 
administration. And in 2004, I criticized the decision that is 
mentioned here on lines 6 through 14 to increase what Fannie Mae and 
Freddie Mac did.
  Let me say, Mr. Chairman, if people think I am quoting selectively, I 
want to pay tribute sincerely, because it works out good for me in this 
case, to the illogical integrity of the gentleman from Texas.
  Because I am quoting from the amendment put in this bill by the 
gentleman from Texas, I urge people to read page 183 of the bill. It is 
language that was offered by the gentleman from Texas, Mr. Hensarling--
not Mr. Green, not Mr. Hinojosa, Mr. Hensarling--and we accepted it.
  It clearly documents that the explosion in subprime loans came under 
Republican control. The increase in Fannie Mae and Freddie Mac subprime 
loans came then.
  Yes, I was wrong to say earlier in the decade there wasn't a problem, 
because I didn't anticipate the extent to which the Republicans were 
going to push Fannie Mae and Freddie Mac into the hole. I then did join 
with Mr. Oxley in trying to get legislation through.
  In 2005, I voted for a bill in committee that Mr. Oxley had.

                              {time}  1230

  My colleague, Mr. Hensarling, voted against it in committee. Then we 
flipped on the floor because we had a disagreement about housing. And I 
got my way on housing in the committee, he got his way on housing in 
the floor, and we flipped. But the fact is that the bill then failed in 
2005. Not until 2007, when we had the majority, was any legislation 
dealt with, in an effective way, on Fannie Mae and Freddie Mac and was 
any bill even considered on subprime lending.
  Ms. JACKSON-LEE of Texas. Mr. Chair, I rise today in strong support 
of H.R. 1728, the Mortgage Reform and Anti-Predatory Lending Act. 
Additionally, I would like to extend my gratitude to my distinguished 
colleague, Representative Brad Miller from North Carolina for 
introducing this important legislation. This act is designed to prevent 
a recurrence of the problems in the subprime market that are 
responsible for harming many American homebuyers. If passed, this 
legislation will promote financially friendly terms throughout banking 
establishments and mortgage lenders which will help all American 
citizens in the current economic crisis. I urge my colleagues to 
support this important bill.
  H.R. 1728 will prohibit steering incentives in connection with 
origination of mortgage loans; this act will also direct the federal 
banking agencies to prohibit or condition terms, acts, or practices 
relations to residential mortgages loans that are abusive, unfair, 
deceptive, predatory, inconsistent with reasonable underwriting 
standards, or not in the interest of the borrower. These stipulations 
will ensure the people are not lured into mortgage loans for the wrong 
reasons or when they cannot afford the loan. We must establish a system 
of accountability in our country, and H.R. 1728 will

[[Page 11750]]

enable a strong structure that will provide financial responsibility 
for both lenders and borrowers.
  H.R. 1728 also includes a number of other rules and regulations to 
help the mortgage industry. Some of these stipulations include:
  Permitting a consumer to assert a right to mortgage loan rescission 
as a defense to foreclosure
  Prohibits specific practices such as (1) certain repayment penalties, 
(2) single premium credit insurance, (3) mandatory arbitration, and (4) 
mortgages with negative amortization.
  Sets forth tenant protections in the case of foreclosure
  Requires a six-month notice before a hybrid adjustable rate mortgage 
is reset
  Establishes pre-loan mortgagor counseling as a prerequisite to a 
high-cost mortgages
  Prescribes mandatory disclosures in monthly statements for 
residential mortgage loans
  All these stipulations are set forth to protect the consumer from 
being uninformed and unknowledgeable and the process, procedures, and 
legal rules pertaining to their mortgage.

                                 Texas

  In 2007, Texas ranked fourth behind California, Florida, and Illinois 
in pre-foreclosures. Last year, Texas held the top seat for active 
foreclosures.
  We cannot continue to stand by as things get worse. Texas reported 
13,829 properties entering some stage of foreclosure in April, a 16% 
increase from the previous month and the most foreclosure filings 
reported by any state. The state documented the nation's third highest 
state combined foreclosure rate one foreclosure filing for every 582 
households.
  Many homeowners in my district are worried about missing their next 
house payment or their next home equity mortgage, or their interest 
rate going up. These families are under stress and in constant fear of 
losing their homes. While H.R. 1728 is not the last word in mortgage 
legislation, it is a great beginning.
  Phil Fontenot and his wife, Kim Monroe, qualified for a $436,000 
dollar mortgage although they ran a small day care center. A mortgage 
broker approached the Fontenots and offered to get them a loan. They 
told the broker the most they could afford was $2,500 a month, but with 
their adjustable mortgage it jumped to $4,200, a price nearly twice 
their monthly budget. Without a lawyer, the Fontenot's failed to 
realize the complexity and precedence of their mortgage.
  In contrast, Matt and Stephanie Valdez say they knew exactly what 
they were doing when they bought a small two-bedroom for $355,000. They 
could afford the initial payments and planned to refinance the mortgage 
before the interest rate jumped to 11 percent. But they couldn't do it 
because the value of the house had fallen below what they owed on the 
mortgage. They say they can afford the higher payments, but see no 
point in making them.
  One first-time home buyer, a Hispanic--minority, 760 credit score, 
which should make her eligible for the best loan products out there, 
got a subprime of 2/28, which is a loan that was fixed for two years, 
adjustable for twenty-eight, and with a balloon payment. 760 credit 
score should have the best product available. She lives in an 
apartment, and not even in the house, because she can get an apartment 
cheaper and still have extra money to help pay the mortgage on the 
house that she owns. And she's hoping to refinance, to do something 
before it adjusts in 2008.
  These are the atrocities that subprime mortgage crisis has brought 
upon the American public, and H.R. 1728 is a start towards alleviating 
these problems.
  Americans are taught to work hard and make money and to buy a house, 
but we are never taught about financial literacy. In these tough 
economic times, it is imperative that Americans know about financial 
literacy; it is crucial to our survival. Americans need to be prepared 
to make informed financial choices. Indeed, we much learn how to 
effectively handle money, credit, debt, and risk. We must become better 
stewards over the things that we are entrusted. By becoming better 
stewards, Americans will become responsible workers, heads of 
households, investors, entrepreneurs, business leaders and citizens.
  I am reminded of how important this issue is to American society, as 
I was invited to attend a financial literacy roundtable panel on Monday 
evening at the New York Stock Exchange. The panel was sponsored by the 
Hope Literacy Foundation. The panel was moderated by John Hope Bryant. 
I was surrounded by some of the great financial literacy experts in the 
nation. At the roundtable, I discussed the importance of financial 
literacy for college and university students. It is important that 
students be taught financial literacy. The facts about students and 
financial literacy are astounding.
  Owning a home is the American Dream, but hundreds of thousands of 
people are on the brink of losing their homes and becoming the next 
victims of the housing crisis. Recently, I joined the Democratic 
Congress in passing the American Housing Rescue and Foreclosure 
Prevention Act of 2008, which will provide mortgage-refinancing 
assistance that will help keep families from losing their homes and 
protect neighboring home values.
  Through vital legislation such as this, and providing key resources 
and tools to my constituents, I will continue to fight and save homes 
and promote fair and informative mortgage policies in Houston as well 
as across this nation.
  Mr. HOYER. Mr. Chair, it is well-known by now that our economic 
crisis began as a foreclosure crisis. It began with homeowners across 
America signing up for mortgages they could not afford. And even though 
few of us knew it at the time, much of our financial system was riding 
on their ability to pay those mortgages off. When it became clear that 
many of them could not, the economic chain reaction affected every 
community in America. For a family, a foreclosure is traumatic enough--
but we have also learned from this crisis that foreclosures can have 
wide public consequences, as well.
  Of those who applied for mortgages they could not possibly pay back, 
some were simply irresponsible. But many others were hardworking, 
responsible homeowners who fell victim to predatory lending. 
Unfortunately, incentives in our financial system made that predatory 
lending possible: unscrupulous mortgage brokers were not required to 
provide sufficient information to homeowners, and those who then sold 
the mortgages had little reason to see that they were sound.
  This bill goes a long way toward correcting those flaws, protecting 
future homeowners, and cracking down on predatory lending. It helps 
consumers get full information--the information they need to decide 
wisely on what is one of the biggest financial commitments of their 
lives. It prevents lenders from steering borrowers into higher-cost 
loans and bans yield spread premiums and other compensatory incentives 
that lead brokers to push those loans on borrowers. It also establishes 
national standards for the protection of borrowers and ensures that 
those who entrap consumers in predatory loans are liable for adjusting 
the loan's terms and paying the borrower's costs, including attorneys' 
fees.
  Finally, this bill requires those who securitize loans to third 
parties to put ``skin in the game'' and retain interest in at least 5% 
of the credit risk of each loan they sell or transfer. This provision 
will ensure that, at every link of the chain, there is an interest in 
seeing that the loan is repaid and that the homeowner does not go into 
foreclosure.
  Mr. Chair, this is a strong, carefully deliberated response to the 
foreclosure crisis, one that rules out many of the unscrupulous 
practices that harmed so many responsible families--and helped put an 
entire economy at risk. I believe that if these provisions had been in 
place 10 years ago, the foreclosure crisis might have been averted. We 
cannot turn back time. But we can learn--and if we have learned 
anything, it is how much we need legislation like this. I urge my 
colleagues to support it.
  Mr. VAN HOLLEN. Mr. Chair, I rise today in support of H.R. 1728, the 
Mortgage Reform and Anti-Predatory Lending Act.
  This country is in the midst of a foreclosure crisis. After 
experiencing the effects of the first wave of foreclosures last year, 
we are now hearing warnings of a second, more harmful wave of subprime 
and predatory loan inspired foreclosures in the year ahead.
  While everyone pays when a home is foreclosed upon, the people hit 
hardest are the elderly--who are easily deceived, the poor--who have 
few options, and people of color--who are often not informed fully 
about all their options. For decades, predatory lenders have targeted 
American borrowers of color with subprime and predatory loans. In a 
2005 Federal Reserve study, it was shown that African Americans were 
3.2 times more likely to receive a higher cost, subprime loan than 
Whites. Latinos were 2.7 times more likely.
  This bill targets the harmful practice of unfairly issuing subprime 
loans or using predatory lending to take advantage of borrowers.
  While the legislation is not perfect, it does have some key 
provisions that are desperately needed.
  Among its many useful provisions, H.R. 1728 establishes an ability-
to-repay standard whereby the lender must determine that the borrower 
has a reasonable ability to repay the loan, present a net tangible 
benefit to homeowners seeking to refinance, and ensure that the loan 
cannot have any predatory characteristics.

[[Page 11751]]

  H.R. 1728 also establishes a safe harbor for qualified, 30 year fixed 
loans. Doing so will help shift the incentives away from exotic 
mortgages.
  And, the bill establishes protections for tenants who can be made 
homeless if their landlord fails to pay the mortgage. This bill gives 
tenants the right to remain in their homes until the end of their 
lease. If they do not have a lease or if the property is purchased, 
then tenants must be given 90-day notice to vacate.
  These are important and necessary protections for homeowners and 
renters. I encourage my colleagues to join me today in voting for H.R. 
1728, the Mortgage Reform and Anti-Predatory Lending Act.
  Ms. VELAZQUEZ. Mr. Chair, across the country hundreds of thousands of 
hard-working families have fallen victim to predatory lending. Poor and 
minority communities have been targeted. Today, we are seeing the 
results. The foreclosure rate is the highest in a quarter century, and 
many others are burdened by debt.
  That's why H.R. 1728 is needed. It enacts simple reforms that will 
level the playing field for consumers. The Mortgage Reform and Anti-
Predatory Lending Act will help the nation move toward recovery. It 
will give consumers the confidence to purchase a new home by ensuring 
predatory lending practices become a thing of the past. The bill would 
make it illegal for lenders to make loans that homeowners cannot 
reasonably be expected to repay.
  It not only sets guidelines for fair lending, but takes strides to 
empower the borrower. For years, I have said that one of the most 
effective ways to stop predatory lending is to give consumers 
knowledge. This legislation includes my initiative to provide increased 
access and information on the benefits of home inspections--and give 
homebuyers a leg up when dealing with lenders.
  Last, but not least, when we think of homes going into foreclosure, 
we cannot forget those who live in apartment buildings. In New York, as 
in many urban areas, more than half of our city rents. And today, as 
many as 90,000 New Yorkers reside in buildings with debts too high to 
maintain. These families, at no fault of their own, could be out on the 
street if their buildings go into foreclosure.
  The amendment I have proposed would protect tenants and keep 
multifamily buildings out of foreclosure. It establishes a new program 
to stabilize troubled buildings by refinancing them or facilitating 
their transfer to new responsible owners.
  I urge you to protect renters, to protect homeowners, and to put a 
stop to the abusive lending practices that have hurt so many American 
families. I urge a ``yes'' vote.
  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 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.
  Ms. CLARKE. Mr. Chair, today I rise in strong support of H.R. 1728 
The Mortgage Reform and Anti-Predatory Lending Act of 2009. This bill 
will finally put a stop to the abusive and predatory lending practices 
that have contributed to our nation's highest home foreclosure rate in 
25 years. In recent years, some homeowners were deceived and some 
homeowners received more expensive loans than they could afford. In 
response, this bill would ensure that mortgage lenders make loans that 
benefit the consumer--and would bar lenders from steering borrowers 
into higher cost loans. Moreover, it will prohibit lenders from 
offering ``reasonable sounding mortgages,'' only to hide huge fees, 
rising interest rates and junk insurance in the fine print. No longer 
will lenders be able to ``get rich'' at the borrower's expense. The 
Mortgage Reform and Anti-Predatory Lending Act prescribes a simple 
standard for all home loans: institutions must ensure that borrowers 
can repay the loans they are sold, before they sign on the dotted line. 
Under this measure, lenders and the secondary mortgage market who don't 
comply with these standards would be held liable by consumers for 
rescission of the loan and the consumer's costs for rescission, 
including attorney's fees. This would encourage the market to move back 
toward making fixed-rate, fully documented loans.
  Although increased regulation of the lending market is crucial to the 
resurgence of our housing market and economy--the main reason why I 
stand today is because of this bill promises to bridge the financial 
information gap. For many people, especially in my district of Central 
Brooklyn, homeownership allows them to live independently and in 
relative comfort, while slowly accruing wealth simply by staying in one 
place. But predatory lending and mortgage fraud undermines a low-income 
homeowner's grasp on economic security, leaving the most vulnerable of 
our society with insurmountable debt. Thereby, continuing the cycle of 
poverty.
  In the case of the 11th Congressional District, most foreclosure 
victims live in low and moderate income working class communities, 
where conventional financial services are not available. Corrupt 
lenders prey on these people, offering loans they know the borrower 
can't afford. Good lending advice should always be available to all. 
The Mortgage Reform and Anti-Predatory Lending Act directs the 
Secretary of Housing and Urban Development to establish a grant program 
to provide legal assistance to low income homeowners and tenants 
concerning home ownership preservation, foreclosure prevention, and 
tenancy associated with home foreclosure. These grants would be given 
out to qualifying state and local governments and nonprofit 
organizations offering homeownership or rental counseling. This would 
help level the playing field for those most susceptible to the corrupt 
dealings of predatory lenders.
  Addressing the mortgage foreclosure crisis is one of my top 
priorities. This is why, the day after I was sworn into office, this 
year, I proudly voted for the Systematic Foreclosure Prevention Act 
which directed the FDIC to create a program that would provide 
incentives to loan servicers for mortgage medication. Additionally, 
earlier this year--I introduced my own legislation, H.R. 1848, the 
Foreclosure Prevention Act--that authorizes an appropriation of $100 
million dollars to Neighbor Works America for foreclosure mitigation 
activities and mortgage counseling. I am very pleased that the 
principals of my bill were adopted into the Mortgage Reform and Anti-
Predatory Lending Act.
  Lastly, I am proud that we are doing what must be done to rebuild our 
economy in a way that is fair and consistent with our values. Again, I 
stand in strong support of H.R. 1728, and pledge to continue my fight 
for common sense reform and consumer protections.
  Ms. LINDA T. SANCHEZ of California. Mr. Chair, I offer my strong 
support for the Mortgage Reform and Anti-Predatory Lending Act.
  Abusive and predatory lending practices have wreaked havoc upon the 
American economy, bringing it to its worst state since the Great 
Depression. What started as a subprime mortgage crisis has ballooned to 
affect everyone. Millions of families have lost their homes or face the 
prospect of foreclosure, and businesses large and small are laying-off 
employees in record numbers. Unemployment figures have risen to numbers 
unseen in decades.
  Although Congress has made great strides to stabilize and rejuvenate 
the economy, we must regulate lenders so that a crisis like this

[[Page 11752]]

will never happen again. We must protect innocent home buyers from 
unscrupulous mortgage lenders eager to make a quick buck. Mortgage 
lenders should not steer borrowers into higher cost loans just to 
increase their commissions. Mortgage institutions should ensure that 
borrowers can repay the loans they are sold. Creditors should retain an 
economic interest in a portion of the loans they sell, which would help 
them to be more responsible about initiating loans.
  Passing the Mortgage Reform and Anti-Predatory Lending Act is the 
right thing to do. The Mortgage Reform and Anti-Predatory Lending Act 
will outlaw many of the egregious lending practices that have 
multiplied in recent years and spark a return to more responsible 
lending methods.
  These much-needed changes are long overdue and will protect 
vulnerable home buyers. That is why I urge my colleagues to support 
this critical legislation.
  Mr. DINGELL. Mr. Chair, I rise in support of H.R. 1728, the 
``Mortgage Reform and Anti-Predatory Lending Act.'' Risky lending 
practices, combined with the consequent securitization of mortgages, 
ultimately brought a violent end to the housing bubble and left the 
United States with a constricted credit market not seen in generations. 
In short, simple avarice and an inexcusable disregard for the long-term 
health of the mortgage market gave rise to the economic crisis in which 
this Nation presently finds itself mired.
  Just as our predecessors did in the wake of the Great Depression, we, 
too, must enact laws to ensure transparency in our economy and prevent 
the recurrence of practices that have left millions of Americans facing 
foreclosure. H.R. 1728 is but one of several essential means by which 
to achieve that end. This legislation, by requiring the licensing and 
registration of mortgage originators and proof of a borrower's ability 
to repay a home loan, will serve to impede--and hopefully altogether 
prevent--the irresponsible home lending practices that have in great 
part crippled the economy of my home state of Michigan, which, with one 
foreclosed home for every 136, has the sixth-highest foreclosure rate 
in the nation.
  Although politically expedient to focus our ire over the current 
economic crisis on insalubrious actors in the financial services sector 
and making them the target of punitive legislation, we must not lose 
sight of the necessity of providing consumers adequate protection from 
predatory lenders. H.R. 1728 recognizes this by prohibiting any 
compensation structure that could cause a loan originator to steer 
applicants toward costlier mortgages, providing a grace period for 
tenants before eviction from their homes, and creating an Office of 
Housing Counseling within the Department of Housing and Urban 
Development to educate consumers about what some might term as the 
Byzantine inner-workings of the housing market.
  I am proud to support passage of this legislation and urge my 
colleagues to do so as well.
  Mr. HELLER. Mr. Chair, I support and would have voted for H.R. 1728, 
the Mortgage Fraud and Anti-Predatory Lending Act. Considering the 
serious situation in Nevada related to housing issues, I support and 
would have voted for this bill to reform the mortgage and housing 
industry. H.R. 1728 reforms federal laws related to mortgage loan 
providers, those that buy or sell mortgages on the secondary securities 
markets, as well as appraisers. This bill will help reduce predatory 
lending practices and restrict lenders from making loans available to 
consumers that cannot afford them.
  In the last Congress, I supported and voted for a similar bill, H.R. 
3915, the Mortgage Reform and Anti-Predatory Lending Act of 2007. This 
bill passed the House by a vote of 291-127, on November 15, 2007, but 
was never considered by the Senate. Though this new version of the bill 
in the 111th Congress has a number of differences, and is not a perfect 
piece of legislation, I still would have voted in support of the 
legislation. I sincerely hope that some of the changes that need to be 
made will be achieved by the Senate or in a conference committee.
  The economic downturn and housing situation in Nevada is dire. 
According to one leading foreclosure tracking service, foreclosures in 
Nevada were up 108% from February 2008 to February 2009. Nevada is the 
number one state, per capita, in foreclosures. Housing inventory is at 
an all-time high and construction and new starts are at a near 
standstill in both northern and southern Nevada. Clark County is one of 
the hardest hit counties in the nation.
  Reforming mortgage fraud and predatory lending practices is critical 
to restoring confidence in the nation's housing market, helping get the 
economy back on track, and most importantly, helping keep Nevada 
families in their homes.
  Ms. LEE of California. Mr. Chair, I rise in strong support of H.R. 
1728, the Mortgage Reform and Anti-Predatory Lending Act.
  I want to thank Mr. Brad Miller and Mr. Mel Watt for sponsoring this 
important legislation and for being a champion for consumers and 
borrowers. I also want to thank Chairman Frank for his commitment to 
finally bringing real reform to our mortgage markets and ending 
predatory lending and misleading and abusive lending practices.
  I served for 8 years on the House Financial Services Committee with 
my colleagues and we repeatedly warned the, then majority, Republicans, 
the Bush Administration, the Treasury and the Federal Reserve about the 
need for stronger oversight and critical reforms that would end the 
pattern and practice of predatory lending.
  Our warnings fell on deaf ears.
  They chose to allow kickback schemes like yield spread premiums which 
put the mortgage lender's financial incentives in direct conflict with 
the interests of the consumers they are supposed to serve.
  They chose to allow the reprehensible act of ``steering'' lower 
income, senior and minority borrowers into higher rate sub-prime and 
alt-a loans than they qualify for.
  They chose to blindly trust financial institutions to ``regulate 
themselves''.
  And we and our entire nation know where that got us.
  It is long past time that we bring sound, reasonable regulation and 
oversight to our mortgage markets.
  And this bill will do that.
  I am also very pleased that this bill will protect renters and 
tenants who have been silently suffering due to the wave of 
foreclosures.
  Too many renters who have paid their rent on time have been finding 
out for the first time that the property they live in is being 
foreclosed when the sheriff delivers an eviction notice.
  Innocent tenants should be protected and let me thank Mr. Ellison, 
Mr. Miller, Mr. Watt and Mr. Frank for acting on behalf of innocent 
renters.
  I encourage my colleagues to vote yes on H.R. 1728.
  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-

[[Page 11753]]

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.
  The Acting CHAIR (Mr. McDermott). All time for general debate has 
expired.
  Under the rule, the Committee rises.
  Accordingly, the Committee rose; and the Speaker pro tempore (Mr. 
Pastor of Arizona) having assumed the chair, Mr. McDermott, Acting 
Chair of the Committee of the Whole House on the State of the Union, 
reported that that Committee, having 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, had come to no resolution thereon.

                          ____________________