Mortgage Overhaul Bill Clears House; FHA Reform Stalled
Responding to the turmoil in the nation's subprime markets, the House on Nov. 15 passed H.R. 3915, the Mortgage Reform and Anti-Predatory Lending Act of 2007, by a vote of 291 to 127.
The bill, which seeks to curb abusive mortgage lending practices, would require lenders to make sure borrowers have a reasonable ability to pay back a loan, bring mortgage brokers under a nationwide licensing registry, expand some limits on high-cost mortgages and establish some legal liability standards for mortgage securitizers.
Lawmakers also adopted provisions from separate legislation (H.R. 3837) sponsored by Rep. Paul Kanjorski (D-Pa.) that would establish federal standards for appraisers and require certain borrowers to open escrow accounts along with their mortgages to protect against unexpected taxes and insurance premiums.
Prior to debate on the bill, NAHB sent a letter to every House member supporting efforts to address abuses in lending practices but also urging the Congress to "exercise caution in this process to avoid unnecessarily reducing the flow of mortgage credit during this time of market turmoil."
Hammering home this message of caution, the letter added that "any legislative effort addressing mortgage financing should be mindful of the negative impacts a further constriction in mortgage credit could have on the housing economy as a whole."
Senate Banking Committee Chairman Christopher Dodd (D-Conn.) said that he will soon introduce companion legislation in the Senate "that will be designed to provide strong standards and tough remedies to punish predatory lending and reward affordable loans.”
“In addition, my legislation will address the abuses in the mortgage servicing industry, which, itself, is driving people unnecessarily into foreclosure," he said.
FHA Setback in Senate
Meanwhile, an NAHB-supported bill to address the mortgage credit crunch stalled in the Senate last week.
Senate Majority Leader Harry Reid (D-Nev.) sought to bring FHA reform bill S. 2338 to the Senate floor by unanimous consent but Sen. Tom Coburn (R-Okla.) objected, scuttling the bill for now.
Senate passage of FHA reform would likely have resulted in legislation being enacted into law before year-end, since the House has already approved its version of FHA modernization.
Coburn's action does not spell the end of FHA reform, but it most likely will delay any final congressional passage into early next year.
To view the legislation, click here and enter the bill number in the box in the upper center screen.
For more information, e-mail Scott Meyer at NAHB, or call him at 800-368-5242 x8144.