Summary of The Fair Mortgage Practices Act (H. R. 3012)
Sponsored by House Financial Services Ranking Member Spencer Bachus, The Fair Mortgage Practices Act:
Culminates a 16 month process initiated by Committee Republicans to
achieve consensus regarding solutions to predatory lending concerns by
reaching out to Democrats, the mortgage industry, and consumer groups.
Offers a measured solution to a worsening problem.
Currently there are about 13 million so-called subprime loans
outstanding, and nearly 5 percent of them are entering foreclosure
according to the Mortgage Bankers Association.
Curbs sharp practices without yielding unwanted consequences.Our
goal is topreserve the benefits that subprime lending has brought to
low- and middle-income citizens, while protecting against the abusive
practices which constitute a small part of the subprime market.
Protects borrowers of limited means
by restricting prepayment penalties on Hybrid ARMs including 2/28s and
3/27s, cracking down on mortgage fraud, and requiring that subprime
mortgages have escrow accounts for taxes and insurance at the time the
loan is consummated.
Promotes sound mortgage underwriting practices by encouraging financial institutions to evaluate a borrower's ability to repay.
Benefits borrowers and lenders alike
by encouraging greater accountability and professionalism within the
mortgage industry through new registration and licensing requirements.
Empowers homebuyers through increased access to better information by improving disclosures for borrowers and improving support for housing counseling.