This was a vote on House passage of H.R, 1728, the Mortgage Reform and Anti-Predatory Lending Act. That legislation was designed to help ensure that lenders only make loans that borrowers will be able to repay. The House Financial Services Committee, which developed the bill, said the legislation would “curb lending that had been a major factor in the highest home foreclosure rate in the nation in 25 years . . . It would establish a simple standard for all home loans: institutions must ensure that borrowers can repay the loans they are sold.” The bill was being opposed by the Mortgage Bankers Association.
Rep. Cardoza (D-CA) began his statement in support of the bill by noting: “(M)any economists have correctly stated that the foreclosure crisis is the root of our economic meltdown, and . . . until the housing market is stabilized, the economy will continue to worsen . . . .” He said that a similar mortgage crisis must never be permitted again and “(T)he (Act) is one more step in that direction.”
Cardoza argued that “the foreclosure crisis can be traced back to the rapid increase in subprime mortgages and risky underwriting practices, most of which were made with no Federal supervision,” and that borrowers “were lured into low ‘teaser’ introductory interest rates which morphed into loans which they had little chance of repaying once rates increased, starting the uptick in the foreclosure market. H.R. 1728 is aimed at preventing these predatory practices in the future.”
Rep. Manzullo, speaking in opposition, claimed that the additional costs for such things as appraisals necessitated by the bill would cost the mortgage banking industry nearly three billion dollars. He said this would be translated into additional “hidden costs” of $700 per loan to future borrowers.
Rep. Sessions (R-TX), also speaking in opposition, said the legislation “limits choice, reduces credit, and increases costs . . . at a time when the effort should be about making home mortgages more reliable, (and) . . . making sure that consumers would be able to have an opportunity to have a chance to have a home.” He also criticized an authorization in the bill to support law suits against violating lenders as “a $140 million slush fund for trial lawyers.” Sessions cited a statement by the head of the National Consumer Law Center, which he said supports the notion that establishing the fund is effectively “paying lawyers to come and do what we should do here in this body with thoughtful, honest, straightforward legislation.”
The bill passed by a vote of 300-114. Two hundred and forty Democrats and sixty Republicans voted “aye”. One hundred and eleven Republicans and three Democrats voted “aye”. As a result, the House passed and sent to the Senate the Mortgage Reform and Anti-Predatory Lending Act.