Washington, DC - Congressman Wm. Lacy Clay (D) Missouri praised House passage today of H.R. 1728, the Mortgage Reform & Anti-Predatory Lending Act, which was approved by a vote of 300 – 114. Congressman Clay, who serves on the Financial Services Committee that shaped this legislation, applauded tougher rules for both lenders and borrowers included in the bill.
“This bill attacks one of the root causes of the recession, predatory lending and the abuses in the housing market that led to the collapse in home prices and the huge tide of foreclosures,” said Mr. Clay. “It protects consumers from the most abusive mortgage practices and it also protects renters who can be left homeless because of foreclosures. Our bill stops lenders from steering borrowers into loans that they can’t afford and it establishes national standards for the protection of borrowers, ensuring that those who entrap consumers into predatory loans are liable for adjusting the loan’s terms and paying the borrower’s costs. The law also prevents borrowers from deliberately misstating their income on loan applications. Finally, this bill requires those who securitize loans to third parties to 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.”
The Congressman continued, “The truth is that our lax laws failed to keep up with the complexities of the financial services industry and allowed the greed of some lenders to abuse millions of American families. This bill corrects that and along with the just-passed Credit Cardholders’ Bill of Rights and the Fraud Enforcement and Recovery Act, it is a key component in our drive to restore integrity and stability in the housing market and the financial services industry."