HR3915 Passes to Full House for Consideration
A bill designed to curb abusive mortgage lending practices was passed out of the House Financial Services Committee this week with a favorable vote of 45 to 19. To become law, the bill needs approval of the full House; then would need to be passed by the Senate; and finally signed by the president.
The bill, a response to the crisis in the subprime mortgage market, tightens lending regulations by requiring lenders to consider a borrower's ability to repay an adjustable-rate mortgage after monthly payments reset higher than introductory rates, and also ensure that borrowers receive a "net tangible benefit" to refinanced mortgages. It also would require mortgage brokers be licensed, prohibit lenders from being compensated for steering borrowers toward certain high-cost products and assign some limited liability to secondary market investors that finance certain subprime loans.
Opponents said the legislation would make it harder for borrowers to obtain a house and increase the cost of credit. But supporters said the problems in the mortgage-finance system allowed excesses and abuses to hurt homeowners. They said lenders were able to exploit a patchwork of state and federal laws to trap borrowers in unaffordable loans using questionable underwriting practices.