[Congressional Record (Bound Edition), Volume 161 (2015), Part 4]
[House]
[Pages 4901-4908]
[From the U.S. Government Publishing Office, www.gpo.gov]




                      MORTGAGE CHOICE ACT OF 2015

  Mr. HUIZENGA of Michigan. Mr. Speaker, pursuant to House Resolution 
189, I call up the bill (H.R. 685) to amend the Truth in Lending Act to 
improve upon the definitions provided for points and fees in connection 
with a mortgage transaction, and ask for its immediate consideration in 
the House.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                                H.R. 685

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Mortgage Choice Act of 
     2015''.

     SEC. 2. DEFINITION OF POINTS AND FEES.

       (a) Amendment to Section 103 of TILA.--Section 103(bb)(4) 
     of the Truth in Lending Act (15 U.S.C. 1602(bb)(4)) is 
     amended--
       (1) by striking ``paragraph (1)(B)'' and inserting 
     ``paragraph (1)(A) and section 129C'';
       (2) in subparagraph (C)--
       (A) by inserting ``and insurance'' after ``taxes'';
       (B) in clause (ii), by inserting ``, except as retained by 
     a creditor or its affiliate as a result of their 
     participation in an affiliated business arrangement (as 
     defined in section 2(7) of the Real Estate Settlement 
     Procedures Act of 1974 (12 U.S.C. 2602(7))'' after 
     ``compensation''; and
       (C) by striking clause (iii) and inserting the following:
       ``(iii) the charge is--
       ``(I) a bona fide third-party charge not retained by the 
     mortgage originator, creditor, or an affiliate of the 
     creditor or mortgage originator; or
       ``(II) a charge set forth in section 106(e)(1);''; and
       (3) in subparagraph (D)--
       (A) by striking ``accident,''; and
       (B) by striking ``or any payments'' and inserting ``and any 
     payments''.
       (b) Amendment to Section 129C of TILA.--Section 129C of the 
     Truth in Lending Act (15 U.S.C. 1639c) is amended--
       (1) in subsection (a)(5)(C), by striking ``103'' and all 
     that follows through ``or mortgage originator'' and inserting 
     ``103(bb)(4)''; and
       (2) in subsection (b)(2)(C)(i), by striking ``103'' and all 
     that follows through ``or mortgage originator)'' and 
     inserting ``103(bb)(4)''.

     SEC. 3. RULEMAKING.

       Not later than the end of the 90-day period beginning on 
     the date of the enactment of this Act, the Bureau of Consumer 
     Financial Protection shall issue final regulations to carry 
     out the amendments made by this Act, and such regulations 
     shall be effective upon issuance.

  The SPEAKER pro tempore. Pursuant to House Resolution 189, the 
gentleman from Michigan (Mr. Huizenga) and the gentlewoman from 
California (Ms. Maxine Waters) each will control 30 minutes.
  The Chair recognizes the gentleman from Michigan.


                             General Leave

  Mr. HUIZENGA of Michigan. Mr. Speaker, I ask unanimous consent that 
all Members may have 5 legislative days in which to revise and extend 
their remarks and submit extraneous materials on the bill under 
consideration.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Michigan?
  There was no objection.
  Mr. HUIZENGA of Michigan. Mr. Speaker, I yield myself such time as I 
may consume.
  Mr. Speaker, I rise today in support of my bill, H.R. 685, the 
Mortgage Choice Act.
  As someone who has worked in the housing industry, this is a very 
important issue to me and, more importantly, to all of our constituents 
across the country.
  Last year, the qualified mortgage--or QM--ability to repay rule as 
mandated by the Dodd-Frank Wall Street Reform Act went into effect. 
Nobody has a problem with that, but the QM rule is the primary means 
for mortgage lenders to satisfy its ``ability to repay'' requirements.
  Additionally, Dodd-Frank provides that a QM, or qualified mortgage, 
may not have points and fees in excess of 3 percent of the total loan 
amount.
  As it is ambiguously defined currently, ``points and fees'' include, 
among other charges, fees paid to affiliated, but not unaffiliated, 
title companies, and amounts of insurance and taxes held in escrow.
  As a result of this confusing and problematic definition, many 
affiliated loans, particularly those made to low- and moderate-income 
borrowers would not qualify as QMs and would be unlikely to be made or 
would only be available at higher rates due to heightened liability 
risks. Consumers would lose the ability to take advantage of the 
convenience and market efficiencies and choice offered by one-stop 
shopping.
  I, along with my good friend Representative Gregory Meeks from New 
York, reintroduced H.R. 685, a strong, bipartisan bill that would 
modify and clarify the way that these points and fees are calculated. 
This legislation is very narrowly focused to promote access to 
affordable mortgage credit without overturning the important consumer 
protections and sound underwriting required under Dodd-Frank's 
``ability to repay'' provisions.
  Having been a licensed Realtor and coming out of that industry, it 
didn't take those of us who had been in the industry long to see that 
there was significant problems with the structure of what had led to 
the housing crisis in the last number of years.
  I tell the story oftentimes of the first closing that I did, where a 
check was slid across the desk the table to the seller and then a check 
was slid across the table to the buyer. The closing agent really didn't 
even know what to say.
  It was the first time that they were starting to get into these zero 
down or even 120 percent loan to values, is what was happening.

                              {time}  1615

  I thought to myself, this is not going to end well, and that is the 
case. We need to have that tightened-up system.
  But I think it is important to know that we have some issues with 
that Dodd-Frank provision. This is one of those.
  I do also believe, Mr. Speaker, that it is important to note that 
when we first introduced this bill in 2012, in the last Congress, it 
looked substantially different. However, working with my colleagues on 
the other side of the aisle, I made the decision to make the changes 
necessary to gain their support of the legislation. As a result, it has 
been a truly bipartisan effort at every step of the way in the 
legislative process.
  That is why this very legislation unanimously passed both the House 
Financial Services Committee and the House of Representatives last 
Congress. In fact, as we dealt with this bill again, the new bill, H.R. 
685, it passed out of committee 43-12, after, I think, some had decided 
that they were going to be against it after they were for it.
  It seems that the White House and others on Capitol Hill have decided 
that, rather than taking care of consumers, and rather than trying to 
make the bill work, they have decided that it is a citadel that cannot 
be breached, and not a jot or a tittle of Dodd-Frank can be changed. 
Otherwise, they label it as bailouts and helping out Wall Street and 
all these other things.
  The real truth of the matter is, Mr. Speaker, we are trying to make 
sure that real Americans can obtain the American Dream and buy and own 
their own home.
  Specifically, our bill, H.R. 685, would provide equal treatment for 
affiliated

[[Page 4902]]

title fees and title companies and clarify the treatment of insurance 
held in escrow.
  When things are held in escrow, they don't belong to the owner, they 
don't belong to the bank or the title company that is holding it. All 
they are doing is holding them to then pay for that insurance bill that 
is going to be coming due. They pay for the insurance or the property 
taxes that may be coming up.
  What happens, when someone writes that check every month, they are 
putting a twelfth of that total payment every month into that escrow. 
And it just begs to be clarified.
  These commonsense changes will promote access to affordable mortgage 
credit for low- and moderate-income families and first-time homeowners 
by ensuring that safer, properly underwritten mortgages pass the QM 
test.
  Whether or not you support Dodd-Frank overall, or specifically within 
this area, it is clear the law is going to require some tweaks to 
ensure qualified borrowers aren't locked out of homeownership and the 
beneficial features of a qualified mortgage.
  The QM represents the safest, best underwritten mortgage availability 
on the market. It is the gold standard, Mr. Speaker. We should want 
more people getting QMs, not fewer.
  Quite frankly, this is something that we should all agree on and, as 
I pointed out, we did last term. Our bill doesn't touch any of the 
CFPB's strict underwriting criteria. It doesn't in any way suspend a 
lender's legal requirement to determine that a borrower has the ability 
to repay that loan.
  Mr. Speaker, this body has the opportunity to help more Americans 
realize a portion of that American Dream, as we talked about.
  You know what the best part of it is, Mr. Speaker? We don't need to 
pass a grandiose law or decree. All we need to do is work in a 
bipartisan manner. I think the American people are begging for that, 
and here is an opportunity to do that. We have done it, and to reform a 
burdensome regulation that is negatively impacting our constituents is 
something that we should all strive for.
  So I would like to thank my colleague, Representative Meeks, along 
with many of the others on both my side of the aisle and the other side 
of the aisle who have worked tirelessly to help fix this flawed 
provision currently being implemented in Dodd-Frank.
  I urge my colleagues to vote in support of H.R. 658 and help make the 
dreams of their constituents come true and a reality by ensuring that 
all consumers have greater access to mortgage credit and more choices 
and credit providers.
  Mr. Speaker, I reserve the balance of my time.
  Ms. MAXINE WATERS of California. Mr. Speaker, I yield myself as much 
time as I may consume.
  Mr. Speaker, I rise today in opposition to H.R. 685, the so-called 
Mortgage Choice Act, which would roll back protections for home buyers, 
make mortgages more expensive, undermine Dodd-Frank, and undo the 
important work of the Consumer Financial Protection Bureau.
  As its title indicates, the Mortgage Choice Act would affect choice, 
but in the wrong way. It would invite a return to a recent time when 
hard-working Americans were choosing whether to pay for medication or 
their mortgage, a time when they were faced with choosing between 
sleeping at a homeless shelter or spending one more night in the car.
  These choices were and still are being made by many of those who 
suffered as a result of the financial crisis, a crisis that was caused 
in large part by predatory mortgages.
  During this time, lenders often piled on excessive upfront fees by 
exploiting the opaque pricing and sales system for settlement services, 
like title insurance, which too often left borrowers without the 
information necessary to shop around or negotiate for lower prices.
  They cared little about whether the borrower had the ability to repay 
the loan over the life of the mortgage because they raked in upfront 
fees at the point of origination.
  Just to make it clear, anyone who has bought a home, who has got 
involved with negotiating for a mortgage would understand very clearly 
what we are talking about. We are going to focus on title fees, but 
there are a lot of fees up front that would-be homeowners are asked to 
pay for, including appraisal fees and inspection fees.
  So during the subprime meltdown and the crisis that we had, we 
determined that there were many of the mortgage lenders, the 
originators, who were just piling on these fees. This is in addition to 
the downpayments they were making, and so they were making more money.
  Because they were making more money, this is what caused many of our 
homeowners to lose these homes, because they were paying too much up 
front and they were being gouged with these predatory loans.
  In response, the Dodd-Frank Act entrusted the CFPB with the 
responsibility of ensuring that lenders and their affiliated companies 
were restrained from charging excessive fees.
  What are we talking about?
  We are simply talking about mortgage lenders and originators who 
owned other companies like title companies, or who were affiliated with 
other companies like title companies. And why were they affiliated?
  They were affiliated, or they owned these companies, so that they 
could make more money, because these affiliated companies would mark up 
the price of these fees and, basically, kick back to the originator 
some money.
  One way the CFPB achieved this was through a standard known as a 
qualified mortgage, which, among other things, placed a 3 percent cap 
on upfront fees. What they simply said was, You can't just keep 
charging any old thing that you want to. It doesn't make good sense 
that people are ending up paying 5 percent, 6 percent and on and on in 
these upfront fees. So we are going to put a cap on for 3 percent of 
upfront fees.
  These 3 percent fee caps include those paid to affiliates. Don't 
forget, these are these companies that are owned by the originator, or 
affiliated with them. This 3 percent fee cap includes, again, those 
paid to affiliates of the lender for services such as, again, property 
appraisals, settlement services, and title insurance.
  It is these fees that pose the greatest risks to consumers since they 
invite lenders to steer borrowers directly to their affiliates without 
open competition and with higher prices.
  So, simply, what the originators were doing was saying, okay, this is 
who we are going to get you to pay money to for these services that you 
need in order to get this loan. They didn't ask you if you knew a title 
company. They didn't invite the independent companies in to compete. 
They just simply steered the borrowers into these affiliated companies.
  In the past, creditors have offered incentives like reduced office 
rent, bonuses, commissions, or other financial perks in exchange for 
business referrals.
  Though Dodd-Frank banned these type of kickbacks, some creditors are 
circumventing them by buying or creating businesses so they can profit 
by referring their customers to their affiliated service providers. It 
is worse than referral. They just write it up, and the borrower doesn't 
even know that they had an opportunity to shop around.
  Others, like J.P. Morgan and Wells Fargo, recently settled cases of 
wrongdoing within the past year for engaging in a kickback scheme with 
an affiliated title company.
  But instead of strengthening this ban on kickbacks, today, this House 
considers legislation that would actually incentivize these cozy 
relationships which increase creditors' profits at the expense of 
consumers. In some cases, these referral financial incentives are as 
much as half of the premiums home buyers pay.
  Buying a home is a complex venture. How many among us who own homes 
have really ever shopped around for title insurance? I imagine very 
few.
  Consumers should not have to be worried that their service providers 
are colluding to scam borrowers. Instead, they should be competing to 
provide them the best prices.

[[Page 4903]]

  H.R. 685 would undermine the CFPB's definition of affiliated services 
by removing title insurance fees charged by affiliates of the lender 
from the 3 percent cap. As a result, creditors will actually be 
encouraged to direct borrowers to expensive affiliates, codifying a 
system of kickbacks in our laws. This is not only detrimental to 
consumers but to small businesses that provide unaffiliated title 
insurance.
  So what they are basically saying is, We don't like it that you have 
had reform in the law. We don't like it that you have discovered that 
these kickback schemes go on. We don't like it that you now know that 
some of these originators, these lenders, own some of these businesses.
  We want them to be able to charge as much in fees as they can get. 
Let them gouge, or let them simply write in companies that they know 
will pay them more money for getting this business.
  So we have said, in the Consumer Financial Protection Bureau, that 
this should be limited to 3 percent. That is enough. You don't need to 
take more from the consumers.
  Title insurance is already an uncompetitive market, and State 
protections are often weak and, at times, nonexistent. This measure 
will, ironically, ensure even fewer choices for consumers because 
consumers rarely know that other options exist.
  As a result, they will often simply rely on what they are kind of 
forced to do or made to do, or the recommendations of their lender, 
who, under H.R. 685, can simply refer them to affiliated entities who 
can then charge excessive fees without regard for the 3 percent cap.
  Mr. Speaker, a diverse coalition, ranging from the NAACP and the 
National Council of La Raza to the Center for American Progress and the 
Center for Responsible Lending, have all voiced their opposition to 
this so-called Mortgage Choice Act.
  The Obama administration has pledged to veto the measure because it 
``risks eroding consumer protections and returning the mortgage market 
to the days of careless lending.''
  We need only reflect on the 2008 mortgage crisis to understand that 
lenders too often focused on profiting from upfront payments through 
points and fees, rather than taking care to originate loans whose value 
derives from long-term performance.
  I am alarmed at how short our memories have become. It has barely 
been 5 years since the worst of the crisis subsided, and we are already 
welcoming a return to the abusive practices that contributed to the 
subprime meltdown.

                              {time}  1630

  This measure will drive up the cost of mortgages, limit competition, 
and ultimately hurt consumers, so I sincerely urge my colleagues to 
oppose it.
  Mr. Speaker and Members, I have spent hours with consumers begging 
for loan modifications, trying to save their homes. They didn't know 
what they were signing up for when they signed on the dotted line, for 
many of these mortgages were simply gouging them, simply telling them 
that they could get refis anytime they wanted. They didn't know that 
when they were told: Don't worry about how much money you make, we can 
fix that; don't worry about whether or not we are going to be able to 
not only refinance, but we can give you this for interest only; and on 
and on and on, with all of these exotic products. And they certainly 
didn't know about all of the fees that they were paying up front. They 
didn't understand that they should have had some options. They should 
have had some choices, but they didn't have; they didn't have because 
these lenders were just putting them into paying companies that they 
were affiliated with, that they were going to make more money off of.
  This is shameful. I don't know why we are spending our time in the 
Congress of the United States trying to gouge consumers and trying to 
put us back where we were with the subprime meltdown and the crisis 
that was created.
  We have a lot of things we should be attending to. There are a lot of 
concerns that our consumers have out there. Our consumers are concerned 
about jobs and job creation. They are concerned about pay equity. They 
are concerned about homelessness. They are concerned that we have the 
housing, to attend to those who have jobs that cannot afford to pay the 
price of rental housing. They are concerned that if they want to buy a 
home that they will be treated fairly, that they will not be gouged, 
that they will not be taken advantage of.
  We know that when you buy a home, you have a stack of papers this 
high to sign. We also know that if you are well off, you can get your 
lawyer, you can get your representatives to read through these papers 
and help you get the best mortgage. We know that Members of Congress 
know how to negotiate, know how to bargain, know how to get the best 
loans, know how to shop around; but not all of our consumers are that 
fortunate, not all of them are prepared, and they listen to what they 
are told by their lenders.
  I want to tell you, the business that we are involved in here with 
this bill where we are trying to say forget about that 3 percent cap, 
let these lenders charge as much as they can get, let them gouge the 
consumers--this is wrong. This should not be done by Members who are 
sent here to represent all of our constituents, all of our consumers, 
and more than that, the more vulnerable of them, those who don't have 
high-priced lobbyists in the Halls of Congress, those who can't even 
get their Members of Congress to return their telephone calls if they 
have a complaint. We should be here dealing with the real issues of the 
day, not using our influence and our time to simply fatten the pockets 
of those who would gouge our constituents.
  Mr. Speaker, I reserve the balance of my time.
  Mr. HUIZENGA of Michigan. Mr. Speaker, I yield 1 minute to the 
gentleman from California (Mr. McCarthy).
  Mr. McCARTHY. I thank the gentleman for yielding.
  Mr. Speaker, first off, I will not be long. I know you have a number 
of Members who want to speak for this bill.
  Before I begin, I want to thank Financial Services Committee Chairman 
Hensarling for all the good work he and his committee have been doing 
not only on this bill, but on numerous bills this week. This whole 
week, the House will be voting on bills to promote a healthier economy, 
preserve consumer choice, and help people become financially 
independent.
  You know, Mr. Speaker, it is an ironic thing here in Washington when 
some laws that are passed hurt more than they actually help. I truly 
think everyone in this body wants to do what is best for the American 
people, but that is not how things always turn out.
  There are some in this body who, whenever a problem comes around, 
their gut reaction is to add more regulations, costs, and red tape. For 
some reason, they think paperwork can solve all of our problems, and 
that is exactly what happened with Dodd-Frank. Washington tried to 
solve a problem by regulating the big guys, but all they succeeded in 
doing is hurting the little guys.
  When you look around, who is getting hurt most by Dodd-Frank? It is 
credit unions and community banks. More importantly, it is lower income 
families who can't get the loans they need because one-size-fits-all 
regulations are blocking them.
  We need to give people in this country and the institutions that 
serve them space to live and space to grow. The Mortgage Choice Act and 
so many of the bills that we will see on the floor this week help open 
up that space.
  I want to thank the gentleman from Michigan, Representative Huizenga, 
for being a champion of this legislation to give the American people 
the room they need to achieve their dreams.
  So let's get behind the American people and help them reach financial 
independence by supporting this bill.
  Ms. MAXINE WATERS of California. Mr. Speaker, I have no further 
requests for time.
  I reserve the balance of my time.

[[Page 4904]]


  Mr. HUIZENGA of Michigan. Mr. Speaker, I yield 2 minutes to the 
gentleman from North Carolina (Mr. McHenry), the vice chairman of our 
committee.
  Mr. McHENRY. Mr. Speaker, I want to thank my colleague from Michigan 
(Mr. Huizenga) for his hard work on this piece of legislation. It is 
well crafted and is a very important reform that the American people 
need to understand and appreciate.
  What the American people understand is that Washington regulations 
are preventing them, Americans, from realizing the dream of 
homeownership. These arbitrary, Washington-created barriers are keeping 
young people, recently married couples, and low- and middle-income 
Americans from accessing mortgages they need to own a home. That is 
wrong.
  Right now, consumers are bearing the brunt of regulatory overreach 
under Dodd-Frank. According to the most recent housing data, the U.S. 
homeownership rate is now the lowest that it has been in 20 years. 
Young homeowners are being hit particularly hard. For example, in my 
district, in Buncombe County, in Asheville, the number of young 
homeowners fell to a level not seen since the year 2000. That is 
unacceptable.
  Combine these figures with recent reports indicating serious distress 
in the credit markets, and it becomes clear that young, lower-, and 
middle-income Americans are being squeezed out of the dream of 
homeownership.
  It is important to note that this bill will not do a number of 
things. Nothing in this bill undoes the Dodd-Frank requirement that 
lenders ascertain a borrower's ability to pay, nor does the bill in any 
way change the strict underwriting standards that the CFPB has set for 
qualified mortgages. Instead, this bill simply allows more loans to fit 
under the current limitation on points and fees, thereby expanding 
access to credit at a time when credit is still very tight. It also 
provides clarity to the calculation of points and fees which allow more 
loans to meet the requirement of qualified mortgages.
  These are very important reforms, very necessary reforms, and are 
good for American homeownership. I congratulate my colleague for 
crafting this fine piece of legislation.
  I urge my colleagues to support the bill.
  Ms. MAXINE WATERS of California. Mr. Speaker, I will continue to 
reserve the balance of my time.
  Mr. HUIZENGA of Michigan. Mr. Speaker, I would like to inquire as to 
the amount of time on both sides.
  The SPEAKER pro tempore. The gentleman from Michigan has 20 minutes 
remaining. The gentlewoman from California has 16\1/2\ minutes 
remaining.
  Mr. HUIZENGA of Michigan. Mr. Speaker, with that, I yield 2 minutes 
to the gentleman from Michigan (Mr. Trott), a new colleague of ours.
  Mr. TROTT. Mr. Speaker, I want to thank the gentleman from Michigan 
for the opportunity to cosponsor and to speak in favor of H.R. 685.
  There is no question that Dodd-Frank is making the dream of 
homeownership more difficult for many Americans. There are a myriad of 
unintended consequences that were created by this regulation, and the 
problems are largely the result of an overreach by the Federal 
Government and poorly thought-out rules, rules which, in many cases, 
were written by people that may or may not know the difference between 
mortgagee and mortgagor.
  The Mortgage Choice Act addresses a problem created by the qualified 
mortgage rule. The qualified mortgage rule treats the cost of title 
insurance differently depending on whether the title insurance agency 
is affiliated with the lender. The distinction is nonsensical. In many 
States like Michigan, the title insurance cost is regulated by an 
insurance commissioner or through a filed rate; consequently, the cost 
of insurance in most States is typically the same regardless of whether 
the title agency is an affiliate or not.
  The current definition of points and fees is not only illogical, but 
it also increases the cost of mortgage credit by making lending less 
efficient and less profitable. It also reduces the mortgage options 
that are available to consumers; and it generally makes credit less 
available, which, in turn, stifles the ability of hard-working 
Americans to buy a home.
  The one thing that the current definition of points and fees does do, 
however, is it gives the Consumer Financial Protection Bureau a reason 
to hire more staff to run around the country and audit and impose 
sanctions on lenders, sanctions which ultimately hurt consumers and the 
lending industry.
  I ask my colleagues to support the Mortgage Choice Act, as it truly 
will afford consumers more choices as they pursue their dream of 
homeownership.
  Ms. MAXINE WATERS of California. Mr. Speaker, I will continue to 
reserve the balance of my time.
  Mr. HUIZENGA of Michigan. Mr. Speaker, I yield such time as he may 
consume to the gentleman from Texas (Mr. Hensarling), the chairman of 
our committee.
  Mr. HENSARLING. Mr. Speaker, I thank the gentleman from Michigan for 
his leadership on our committee and for his leadership in bringing this 
bill through our committee on a strong bipartisan vote.
  I have got to tell you, Mr. Speaker, it is with great pride that the 
House Financial Services Committee just a couple of weeks ago voted out 
11 different bills to help American families achieve that coveted goal 
of financial independence, and part and parcel of that quest, that 
dream, is the dream of homeownership.
  Regrettably, there are some people within this body who believe in 
bipartisanship more in theory than they do in practice. I regret those 
who supported a bill before they were against it, but that is where we 
are here today, Mr. Speaker.
  What we are really about here is trying to ensure that low- and 
moderate-income people do not have their Federal Government protect 
them out of their homes, and what we have seen is bad and dumb 
regulation out of Washington do just that.
  The goal of consumer protection ought to be to help empower consumers 
to buy homes they can afford to keep, that we have competitive, 
transparent, innovative markets that are vigorously policed for forced 
and fraud and deceptive advertising. That is the vision we have on this 
side of the aisle, and, frankly, it is at least a vision that some 
Members on that side of the aisle have as well.
  So, Mr. Speaker, this is an incredibly modest--it is still important, 
but an incredibly modest bill. By definition, if it is bipartisan, it 
is going to be modest.
  I am somewhat shocked that under our rules and procedures that this 
wouldn't be on the suspension calendar. And in fact, in the last 
Congress, there wasn't one single vote cast to object to this bill from 
the gentleman from Michigan (Mr. Huizenga), the chairman of our 
Monetary Policy and Trade Subcommittee, a real leader on our committee 
on housing opportunity for low-and moderate-income Americans--not a 
single dissenting vote. But I guess that was before, again, the left 
hand knew what the far left hand was doing. And now, all of a sudden, 
we have entered yet another fact-free zone and we are having all this 
incredible verbiage about Wall Street, when all this bill is doing is 
leveling the playing field between those firms that would be affiliated 
and those that would not so that consumers can have a few more choices 
and benefit from lower cost as they try to get their American Dream.
  If we followed the logic of the far left, McDonald's could serve you 
a burger, but they could no longer serve you fries. You would have to 
go across the street to Burger King for your fries there. I guess 
National Tire and Battery would have to be ``National Tire.'' They 
couldn't sell you a battery anymore. Consumers would be protected and 
not have their choices recognized. I guess the phone company could no 
longer offer you a discount on Internet and cable and phone put 
together because, my lord, those are affiliations, Mr. Speaker; and 
apparently the far left wants to ensure that American

[[Page 4905]]

consumers are stripped of their economic liberty to make choices for 
themselves, to be able to get discounts when products are put together. 
I don't understand it.

                              {time}  1645

  We are trying to ensure that low- and moderate-income Americans have 
convenience, that they have choice, and that they have lower prices. 
The Truth in Lending Act will apply and should apply. We have to 
protect consumers against force, fraud, and deception, but we have got 
to quit protecting consumers right out of their homes.
  So again, I want to thank the gentleman from Michigan (Mr. Huizenga) 
for doing everything he can to help this segment of our American 
population. So often we hear the left and far left talk about 
affordable housing. Once again, it is something they recognize in 
theory; it is just not anything they want to support in practice.
  This is an affordable housing bill. This is an affordable housing 
bill. Consumers will have choice under this bill, thus, the name. So we 
know that talk is cheap, but, unfortunately, votes tend to be 
expensive. This started out as such a bipartisan piece of legislation, 
but then somebody said: Oh, my Lord, this is a clarification or 
modification of Dodd-Frank, and Dodd-Frank is something that came down 
from Mount Sinai. It was chiseled into stone tablets.
  Former Chairman Frank, who chaired our committee, doesn't seem to 
believe that. He came before our committee and testified at least a 
half a dozen different ideas he had for amending his own signature 
legislation. Yet there are those on the far left who would hurt the 
most vulnerable in our society, who would deny them fundamental 
economic liberties to choose the mortgages they want to allow them 
their American Dream of homeownership. That is not right. That is not 
fair. That is not economic justice.
  That is why, Mr. Speaker, it is so critical--so critical today--that 
we support H.R. 685. It was designed to be a bipartisan bill. It should 
be a bipartisan bill, and I urge every single Member to adopt it.
  I thank the gentleman from Michigan for his leadership.
  Ms. MAXINE WATERS of California. I yield myself such time as I may 
consume.
  Mr. Speaker, with all due respect to my chairman, Mr. Hensarling, 
this debate is not about McDonald's, it is not about Burger King, and 
it is not about the National Tire and Battery Company. This is about 
our constituents who want to be homeowners, who are gouged, who are 
misled, and who are steered into companies that are going to provide 
kickbacks for their loan originators.
  We need to get rid of some of these myths. The myth that we have 
heard today is we need H.R. 685 to ensure access to credit for low-
income households. Well, let's talk about the facts.
  The cost of title insurance is opaque. Borrowers are responsible for 
paying for title insurance, but title insurance pricing is basically 
negotiated between the lender and the title insurance company. The 
pricing and sales system is completely nontransparent, making it 
impossible for borrowers to shop for better prices on title insurance. 
In addition, when borrowers spend money on inflated title insurance 
premiums, it makes homeownership less sustainable. High title insurance 
prices mean borrowers have less money to put toward a down payment or 
to put toward improvements to their home.
  Even The Wall Street Journal agrees. Here is a quote from an article 
from March 28, 2014: ``Title insurance can cost hundreds of dollars for 
modest houses and thousands for multimillion-dollar properties. Yet 
many home buyers don't focus on the product, or the price, until they 
sit down at the closing.''
  The article went on to describe that ``upstart insurers and agencies 
are challenging the status quo.'' Two insurers are ``marketing directly 
to consumers on the Internet, offering online quotes to home buyers who 
plug in basic information about the property, such as location, 
purchase price and loan amount. And they are offering savings of up to 
35 percent off what established firms charge.''
  But these upstart companies have had a hard time in securing market 
share because they don't have the profits to afford to offer kickback-
like arrangements.
  The CFPB has taken reasonable steps on the affiliated title insurance 
issue, carefully considering the industry comments in their proposed 
rule and deciding that the harm to consumers was too great to exclude 
affiliated title. The inclusion of title insurance, qualified mortgage 
points, and fee caps serves to limit title insurance pricing from even 
greater excesses.
  As Professor Adam Levitin of Georgetown University, a Democratic 
witness at the hearing on H.R. 685, concluded: ``To the extent that we 
are concerned about ensuring greater availability of credit to 
consumers, exempting title insurance from the HOEPA and QM point and 
fee caps is a terrible idea as it virtually guarantees that consumers 
will be gouged with increased title insurance costs which make 
homeownership more expensive.''
  Make no mistake; Wall Street always argues that consumer protection 
will hurt access to credit when they want to stop those efforts dead in 
their tracks. In fact, we heard these same arguments in the early 2000s 
as the industry lobbied against consumer protection. In 2007, 
Representatives Brad Miller and Mel Watt introduced, or reintroduced 
from 2004, a bill supported by consumer groups to curb predatory 
lending practices which also would have held financial companies that 
securitize mortgages liable for certain violations. That bill 
eventually was included in Dodd-Frank as title XIV of the bill. But 
remember that Bear Stearns spent $500,000 lobbying against Miller's 
bill and another piece of proposed mortgage legislation right up until 
the investment bank cratered in March of 2008.
  Simply, in wrapping up this debate, it is clear that there should be 
a cap on fees. It is clear that when consumers try and sit down at a 
closing and try to do the best job that they can to protect their 
dollars so that they can have money left to fix up the house that they 
are trying to buy or they can have enough money to ensure that they are 
able to make the mortgages, they don't want to be steered in ways that 
some of these loan originators have done and continue to do. They don't 
want to be steered to affiliated businesses who will simply kick back 
some of those profits to the lender who sent them to them in the first 
place.
  So, Mr. Speaker, I would ask my colleagues on the opposite side of 
the aisle to just consider what you are spending your time on. Consider 
whom you are advocating for. Consider that you are advocating for 
people who are making lots of money. They don't really need your 
advocacy. They do very well because they have got high-paid lobbyists 
walking the halls of Washington, D.C., following us around from our 
offices to the toilets. Consider that if this time were better spent 
really supporting the reforms in Dodd-Frank and supporting the Consumer 
Financial Protection Bureau, we would be doing a better job for our 
constituents than coming in here trying to protect the biggest and the 
richest firms who are doing very well out there.
  Don't forget, prior to Dodd-Frank, there was no real protection for 
consumers. That is why we have the Consumer Financial Protection 
Bureau. They are doing a great job; and they are providing us with the 
research, they are providing us with the investigations, and they are 
providing us with the information that we should be using to protect 
consumers rather than coming on this floor and in our committees trying 
to denounce them, trying to make sure that they are not able to do 
business, trying to defund them, trying to discredit them, and trying 
to do everything that they can to keep them from being effective. The 
Consumer Financial Protection Bureau is just about that: protecting our 
consumers in ways that they were not protected before we had the great 
subprime meltdown and the great crisis that was created in this 
country.
  We should all be trying to do our very best not to return to 2008, 
not to

[[Page 4906]]

return to a time where we were destroying communities, where boarded-up 
homes for blocks and blocks and blocks in communities were driving down 
the value of other homes in those communities. We should be trying to 
do everything that we can to make sure that we care about 
homeownership.
  I hear from the other side of the aisle that somehow we don't care 
about people owning homes. But what I really hear when I listen to that 
is that they don't care what price they have to pay in order to get in 
a home; they don't care if they are gouged with high fees; they don't 
care if they are extended credit that they can't afford; they don't 
care that they are going to lose these homes; and finally, they don't 
really care whether or not they are going to get modifications so that 
they can stay in the homes.
  As a matter of fact, many of our consumers who have tried their very 
best to save their homes have been turned down by the very financial 
institutions that put them in the position that they happen to be in. 
Many of those financial institutions we bailed out, and we have gotten 
nothing in return for much of those bailouts that we have done.
  So we have an opportunity to respect not only our constituents and 
our consumers, but to respect the fact that we have finally evolved to 
the point where we have reforms.
  I know and I hear from time to time that somehow we on this side of 
the aisle believe that the Dodd-Frank reforms are cast in concrete, 
that there can be no modifications, no changes. Well, you heard the 
chairman say that we passed out 11 bills. We passed out, in a 
bipartisan way, bills that some of us kind of held our nose and passed 
out because we wanted to show that maybe these particular bills were 
not that harmful and maybe weren't harmful and that we could work in a 
bipartisan way even though some of them questioned some of the work 
that had been done in Dodd-Frank.
  I have said and many other members of the committee on my side of the 
aisle have said that we are willing to make technical corrections; we 
are willing to make some modifications that make good sense, but we are 
not willing to destroy the reform that we did, that we worked so hard 
for. Dodd-Frank is extremely important, and we should be about this 
business of implementing these reforms so that we can protect our 
consumers.
  I am taken aback and I am surprised that many of our Members who are 
here advocating for the rich lenders, for the people who caused the 
problem in the first place, can go back home and look their consumers 
in the eye and tell them they are really working for them, they are 
really working to make sure that they can own a home. They don't really 
know, and I don't think that many of those are going back and saying: 
Well, let me tell you what I did today. I made sure that there was no 
cap on fees and that the lenders can charge whatever they want working 
with the affiliated companies; and this cap at 3 percent that they have 
come up with in Dodd-Frank reforms doesn't make good sense, and they 
should be able to charge you whatever they want to charge you.
  I don't think that we have Members who are here on this floor today 
that are advocating that we get rid of these caps and that we allow 
these lenders to have these relationships with the affiliated companies 
where they keep steering the business into them, steering the business 
into them.
  How many of those who are advocating have asked the lenders: How much 
money are you making back on these loans, on these fees that you are 
allowing the affiliateds to charge them? Do you really get a share in 
those profits? Do you really get a kickback? If so, let's have some 
transparency. Let's shine some light on how much money you are making. 
I bet you one thing. I bet you none of them will tell you: We are not 
making any money. We are just doing this because, well, we are just 
doing it because, oh, we think that this is a better way to do it.
  So I am asking my colleagues in this House to reject this 
legislation. We have been on this floor today on two important bills, 
one on manufactured housing where, again, we have advocates on the 
opposite side of the aisle who would like to see the manufactured 
housing industry make more money on the poorest of people, on the most 
vulnerable in our society. They would like to charge interest rates 
above prime interest, 10 percent above prime interest. As we have 
stated, when the interest rates begin to rise, this means that it can 
go beyond 14 percent to 15, 16, 17, and 18 percent.

                              {time}  1700

  We don't know how high it could go; yet the time that we have spent 
advocating for the richest of the rich who are in this business to be 
able to gouge these poor people and the time that we are spending again 
on another bill that would allow the richest of the rich to gouge poor 
homeowners who don't know and don't understand all these fees that they 
are being charged and the fact that we have a cap that they want to 
remove, why are they spending their time representing those who really 
don't need their representation?
  I would ask my colleagues to reject both of these bills. I would ask 
my colleagues to stand up for the least of these. I would ask my 
colleagues to make sure they remember the lessons of 2008, and they are 
reminded of the fact that not only are families destroyed, but whole 
communities have been destroyed by what took place with this subprime 
meltdown and this crisis that took us into a recession, almost a 
depression.
  We can't forget these lessons; we can't afford to forget these 
lessons. We are Representatives of the people. Representatives of the 
people don't act that way. Representatives of the people don't forget. 
They do everything in their power to make sure that they provide a 
safety net, that they provide some protection, that they look out for 
them, that they are their voice inside this place where we are making 
public policy, that the public policy includes them, that the public 
policy does not forget them, that the public policy is not the public 
policy that is designed and supported by the richest 1 percent in this 
country, but really, the public policy comes out of the voices of all 
of those who have been sent here from all over this Nation from some of 
the richest communities to some of the poorest communities.
  We talk about jobs and the need for the creation of jobs, but I don't 
hear the opposite side of the aisle talking about that. I don't hear 
them talking about how we can create really more housing opportunities 
for those who want to buy and for those who have to rent.
  I don't hear any talk about what we can do to provide economic 
development in this country, how we can repair the infrastructure, make 
sure that our bridges are working, that our water systems are working, 
that our roads are in good shape. I don't hear that. I hear time being 
spent on how we can help the richest of those who don't need our voice, 
who don't need our help.
  It is time to stop this madness. It is time to call it what it is. It 
is time to ask: Why is it that the richest of the folks in the 
businesses in this country who have so many paid lobbyists, who are up 
and down these halls every day, get so much representation? Why is it 
they have so much influence? Why is it they have been able to direct 
the public policy in ways that the average citizen cannot do?
  I want to tell you--you talk about the middle class. Yes, there is an 
erosion of the middle class because of the way that the middle class is 
not really represented. We allude to the representation, but it is 
really not here.
  I ask my colleagues to reject this legislation, to not allow anybody 
on this floor to tell them that this is in the best interest of 
consumers because it is not.
  Mr. Speaker, I yield back the balance of my time.
  Mr. HUIZENGA of Michigan. Mr. Speaker, I yield myself such time as I 
may consume.
  I appreciate the opportunity to come and to try to clarify some of 
the assertions and confused claims that have been thrown out here.

[[Page 4907]]

  My family has been involved in construction since the 1930s--the 
1930s. I will never forget the day--it was a Thursday--when I pulled up 
right down the street from my home and I saw my cousin's business that 
they now own that my dad and uncle and grandfather had started.
  It is a ready-mix concrete company. Literally, all the guys' trucks 
were there, all their pickups. It is a small company. It is about 12 or 
15 people that work there. Every single one of those cement trucks were 
parked in the yard, the exact place that they should not be.
  I found out later that we had trucks on the way to construction sites 
that were turned around and came back. That is seared into my memory. I 
have no interest in going back to where we had been. In fact, I was one 
of those warning about the practices before serving in this body.
  Frankly, if those who were serving in this body who wrote Dodd-Frank 
had actually talked to a few of the people involved in the industry, 
they might have understood what the interaction is between the buyer, 
the seller, the construction agent, the closer, the people that are 
providing title insurance.
  The simple fact is that there is not an understanding of how this 
system works. We may have a common goal of serving consumers. We have 
very different visions about how that needs to be done.
  As I said, there has been lots of assertions and sort of confused 
claims thrown around. Many of them, frankly, are problems completely 
unrelated to what this is, and I am not sure how the activity of the 
Transportation Committee relates exactly to what our work is on the 
Financial Services Committee, but I think it is an old adage: when you 
are losing, you keep talking. That is what has been happening here on 
the floor for those that have been watching.
  The assertion that weak and nonexistent State regulations are out 
there is just amazing to me, especially in California. I am betting the 
insurance commissioner in California would be surprised at this 
assertion, since California is one of the 47 States that regulates 
title insurance. RESPA laws, disclosure requirements written into law, 
transparency is a key element in this.
  I was a licensed Realtor when agency disclosure first came in. This 
was in the midnineties. You had to declare whether you were a buyer's 
agent, a seller's agent, a transactional coordinator. There have been 
real changes, positive changes, that have happened for the consumer in 
that industry over the last 20 to 25 years.
  The irony in this particular situation is that affiliated companies, 
those companies that may have been started by the same people--that is 
the definition, by the way. I might be a small-business owner who owns 
a real estate company, and I start another company dealing with title 
insurance. That now, because that is on my personal tax form, is an 
affiliated company. I can't do or charge what an unaffiliated company 
could do.
  Now, I might buy the argument that was made earlier that these 
companies can just charge whatever they want to charge, but I could 
only buy that if my friends on the other side of the aisle would be 
willing to apply equally the law. The law does not apply equally here. 
It does not do what they claim that they are trying to do.
  The other element that has been talked about a little bit--this is so 
ridiculous; it strikes me. It is like saying I can't shop at Walmart or 
at a Meijer store in our area or other places because they sell fresh 
produce and electronics and hardware. I need to go to a hardware store 
to go pick up my nails; I need to go to the corner grocer to go pick up 
my lettuce, and, by the way, if I want to get a flat screen TV, I have 
got to go somewhere else.
  This is about consumers having choices and abilities to utilize a 
streamline. Those costs need to be disclosed, first of all. Those costs 
oftentimes are regulated, the vast majority of the times are regulated 
by the States; yet it just is a clunky system that does not work in the 
design of Dodd-Frank.
  The assertion that any change of Dodd-Frank somehow benefits or is 
anticonsumer or benefits somebody on Wall Street, go and talk to those 
owners of those small companies in all of our States, go and talk to 
them about what their Wall Street affiliation is.
  This bill is, frankly, widely viewed as unrealistic and unworkable. 
It is time that we face that reality and we change some of the elements 
of this. This is a modest, modest change.
  In fact, it is so modest, frankly, Mr. Speaker, that our previous 
speaker had supported the bill, had supported it when it was in 
committee, had supported it when it was on the House floor, certainly 
did not object to it, and I guess maybe I could say supported it 
because, on August 1 of 2014, she, along with 12 of her colleagues--
including one who has gone on to the Senate--12 Democrats signed a 
letter to Senator Harry Reid requesting him to take my bill up.
  Mr. Speaker, I insert for the Record the letter.

                                    Congress of the United States,


                                     House of Representatives,

                                   Washington, DC, August 1, 2014.
       Dear Majority Leader Reid, Chairman Johnson and Members of 
     the Senate Committee on Banking, Housing, and Urban Affairs: 
     On June 9, the House passed the Mortgage Choice Act (H.R. 
     3211), on the suspension calendar without objection. Senators 
     Manchin and Johanns introduced a companion bill, S. 1577 in 
     October, but it has not yet been considered. We support the 
     Mortgage Choice Act because of our concern about lower-income 
     consumers' access to credit and their ability to select the 
     mortgage and title insurance providers of their choice.
       Passage of H.R. 3211 represents the fourth time that the 
     House has approved virtually identical legislation without 
     objection. In 2007 and 2009, a Democratic House majority 
     passed essentially the same provision in the Miller-Watt-
     Frank anti-predatory lending legislation, and then a third 
     time as part of the House's version of the Dodd-Frank Wall 
     Street Reform and Consumer Protection Act in 2010.
       The Mortgage Choice Act simply excludes the cost of title 
     insurance from the definition of points and fees under the 
     Truth in Lending Act regardless of whether a title insurance 
     agent is affiliated with a mortgage lender or not. It also 
     clarifies that funds held in escrow for the payment of 
     property insurance do not count as ``points and fees.'' The 
     legislation is needed to ensure that smaller loans to 
     creditworthy low and moderate-income consumers can select the 
     mortgage lender and title insurance provider of their choice 
     and obtain a ``qualified mortgage,'' the gold standard for 
     all mortgages.
       The bill authorizes the Consumer Financial Protection 
     Bureau to implement rules governing the exclusion of 
     reasonable title insurance charges from ``points and fees.'' 
     It preserves the Bureau's strong enforcement authority to 
     require transparency and disclosure of affiliations and 
     charges under the Real Estate Settlement Procedures Act 
     (RESPA). In fact, the CFPB has been vigorous in its pursuit 
     of RESPA violations, ranging from minor disclosure errors to 
     kick-backs for referrals by an unaffiliated title company.
       We urge you and the entire Senate to quickly adopt the 
     Mortgage Choice Act to improve access to credit, enhance 
     competition among title insurance providers, and reinforce 
     the CFPB's authority to define what title insurance costs 
     qualify as excludable ``points and fees.''
           Sincerely,
         David Scott, Maxine Waters, Emanuel Cleaver, Henry 
           Cuellar, Daniel T. Kildee, Jim McDermott, Patrick 
           Murphy, Gerald E. Connolly, Michael F. Doyle, Betty 
           McCollum, Gregory W. Meeks, Gary C. Peters, Members of 
           Congress.

  Mr. HUIZENGA of Michigan. My bill and Congressman Meek's bill was a 
good bill last Congress, and it is a good bill this Congress because it 
has not changed at all. It has not changed at all.
  To quote it, she urged the Senate to ``quickly adopt the Mortgage 
Choice Act,'' a bill that would ``improve access to credit'' and 
``enhance competition among title insurance providers.''
  Frankly, Mr. Speaker, my colleague was right last time, and she 
should be right in this Congress. Unfortunately, we are seeing that--I 
am afraid politics may have leaked in. The administration has issued a 
veto threat, and I think we may have seen why some of this change of 
heart has happened.
  I am, frankly, disheartened for the American people that Presidential 
politics have already leaked into what this body should be doing, which 
is representing people, which is making sure

[[Page 4908]]

that they are getting the best end of the stick, not the sharp end of 
the stick.
  Frankly, Dodd-Frank has delivered the sharp end of the stick, 
intentionally or unintentionally, way too many times. It is our job to 
go and fix it and to make sure that the consumers, that our 
constituents, are getting the best service that they possibly can.
  With that, Mr. Speaker, I would like to urge all of my colleagues to 
join so many of us in a bipartisan fashion who support this bill, who 
believe that this is the right time and the right bill to rectify this 
problem, and to get on with it. I request all of my colleagues to 
support H.R. 685.
  I yield back the balance of my time.
  Mr. CUMMINGS. Mr. Speaker, in the wake of the 2008 financial crisis, 
the Dodd-Frank Wall Street Reform and Consumer Protection Act included 
provisions that prohibited mortgage lenders from using their title 
insurance affiliates to gouge consumers.
  Dodd-Frank created a new category of mortgages called Qualified 
Mortgages (QM). Lenders that issue these mortgages are granted special 
legal protection in exchange for keeping costs for consumers below a 
certain threshold. The costs considered under the QM standard encompass 
all compensation a mortgage lender receives--including title insurance 
costs a consumer pays to a company affiliated with a lender.
  These provisions recognized an unfortunate reality: many lenders use 
their title insurance affiliates to charge consumers unnecessarily high 
fees. According to a 2007 report issued by the Government 
Accountability Office (GAO), for example, 70 cents of every dollar paid 
for title fees go toward lining the pockets of agents--not covering 
losses for the lender.
  And the nature of the title insurance market has also opened the door 
to fraud against homeowners. Just recently in my home state of 
Maryland, the Consumer Financial Protection Bureau and the Maryland 
Attorney General negotiated a $35.7 million settlement against Wells 
Fargo and JPMorgan Chase after finding that loan officers at these 
banks received illegal kickbacks to steer customers to a Maryland-based 
title company.
  Americans seeking to purchase a home deserve better from the title 
insurance market. And by including affiliated insurance fees in its 
definition of costs, the QM standard represents an important first step 
in protecting consumers from collusion and price-gouging.
  Rather than strengthen these protections, however, H.R. 685 would 
create loopholes to exempt affiliated insurance fees from the QM cost 
definition and allow lenders to hit borrowers with hundreds and even 
thousands of dollars in unnecessary mortgage costs.
  By rolling back protections for borrowers and raising mortgage costs, 
H.R. 685 would hurt homebuyers just as our housing sector is beginning 
to stabilize from the consequences of a financial crisis caused by 
unscrupulous and abusive practices. I urge my colleagues to reject this 
destructive bill.
  The SPEAKER pro tempore. All time for debate has expired.
  Pursuant to House Resolution 189, the previous question is ordered on 
the bill.
  The question is on the engrossment and third reading of the bill.
  The bill was ordered to be engrossed and read a third time, and was 
read the third time.
  The SPEAKER pro tempore. The question is on the passage of the bill.
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.
  Ms. MAXINE WATERS of California. Mr. Speaker, on that I demand the 
yeas and nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, further 
proceedings on this question will be postponed.

                          ____________________