Media Center

Today, Congressman David Scott praised the passage of H.R. 3915, the Mortgage Reform and Anti-Predatory Lending Act of 2007, from the House Financial Services Committee.

The bill will reform mortgage practices in three major areas. First, the bill will prohibit steering of consumers into bad loans and call for licensing and registration of mortgage originators, including brokers and bank loan officers. Second, the new legislation will set a minimum standard for all mortgages stating that borrowers must have a reasonable ability to repay. Third, the legislation attaches limited liability to secondary market securitizers who package and sell interest in home mortgage loans outside of these standards. However, individual investors in these securities would not be liable. Finally, the bill expands and enhances consumer protections for “high-cost loans” under the Home Ownership and Equity Protection Act and includes important protections for renters of foreclosed homes.

“Georgia has been hit hard by home foreclosures – Georgia needs relief as soon as possible,” Congressman Scott said. “This legislation will stop the all too common practices of steering people into loans they cannot afford. Further, it will stop the practice of creative loan financing to unnecessarily increase the fees and costs to write the loan. Many Georgians are already too far into default for this legislation to help, but we must work to stop the predatory lending cycle now.”

The bill also includes a housing counseling section, similar to legislation introduced by Congressman Scott, H.R. 3133, the Financial Literacy for Homeowners Act. This part of the bill establishes within HUD an Office of Housing Counseling that will coordinate national homeownership and rental housing counseling. Further, it requires HUD to provide financial and technical assistance to States, local governments, and nonprofit organization regarding educational programs, and authorizes appropriations of $45 million for each of fiscal years 2008 through 2011. Finally, it directs HUD to study and report to Congress on the root causes of defaults and foreclosures of home loans.

The bill must now be considered by the full House. Congressman Scott is the senior Georgia representative on the House Financial Services Committee. As a member of the Georgia State Senate, then Senator Scott was instrumental in passing the Georgia law on predatory lending. 

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