Washington, DC – The House of Representatives, yesterday, passed H.R. 3915, the Mortgage Reform and Anti-Predatory Lending Act of 2007.  This bill responds to the subprime mortgage crisis by instituting much needed reform which would prevent bad loans from being made to consumers who cannot repay those loans. The bill would include provisions that would require lenders to ensure a borrower's ability to repay; prohibit certain unfair lending practices; require licensing and registration for brokers and bank loan officers; require additional disclosures for consumers regarding mortgage loans; establish federal minimum requirements while enabling states to impose tougher rules; bring accountability to the secondary market for home loans; expand stronger consumer protections for high-cost mortgages; and create the Office of Housing Counseling within HUD.  Included in the passage of this bill was an amendment proposed by Congressman Al Green (TX-09), a member of the House Committee on Financial Services, which would ensure that the training and continuing education that mortgage originators must receive to maintain their licenses should include, at a minimum, instruction on fraud, consumer protection, and fair lending issues.

The bill also included language proposed by Congressmen Green, Patrick McHenry and Randy Neugebauer in the Financial Services Committee that would require that important mortgage loan terms be disclosed to borrowers on a one –page disclosure form within 3 days after the date of the loan application is received by the creditor. The bill would also require each Good Faith Estimate to include a universal disclosure box at the top of the first page. The universal service box would include important loan terms including the loan amount, loan term, estimated interest, estimated settlement charges, and any prepayment penalties or balloon payments.  By providing this information in a clear and concise format, borrowers would be better able to compare different loan terms they are offered by mortgage originators and take the best deal.

"The housing market is into its worst slump in 16 years – weakening the American economy and making American families less secure.  In 2006, 1.2 million foreclosures were filed – more than one per minute. This problem is even worse in 2007," stated Congressman Green.  "While predatory lending practices can occur in both the prime and subprime markets, the overwhelming number of predatory practices exists in the subprime market. These predatory practices disproportionately impact people of color, the disabled, seniors and female-headed households. My amendment would strengthen consumer protections and ensure that all mortgage originators are educated on important civil rights legislation, including the Fair Housing Act and the Community Reinvestment Act."

"If Congress does not act, we could reverse the progress our country has made over the last decade in bringing the dream of homeownership to over 70 percent of Americans," continued Congressman Green.  "My amendment to include instruction on fair lending education as part of mandatory training for licensing mortgage originators is critical in addressing the civil rights component of this predatory lending legislation. Education on fair lending laws will help the efforts of qualified fair housing organizations that work to: assess community impact of predatory loans, provide outreach and education to community members on the dangers of predatory mortgage lending, provide intervention or rescue services to victims of predatory loans. Comprehensive training will strengthen consumer protections and ensure that all institutions affiliated with a lender are abiding by the Fair Housing Act, Community Reinvestment Act, and other laws.   I would like to thank Chairman Frank and Ranking Member Bachus for working in a bipartisan fashion on this important piece of legislation to maintain hope for American families - the hope that hard-working Americans can fulfill the American dream of home ownership."

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