House Passes Mortgage Reform And Anti-Predatory Lending Act

By a vote of 291-127, the U.S. House of Representatives has approved H.R.3915 – the Mortgage Reform and Anti-Predatory Lending Act of 2007.

According to the bill's text, its general purpose is "to amend the Truth in Lending Act to reform consumer mortgage practices and provide accountability for such practices, to establish licensing and registration requirements for residential mortgage originators, to provide certain minimum standards for consumer mortgage loans, and for other purposes."

Among a series of other measures, the legislation "prohibits steering incentives to mortgage originators, including incentive compensation and any yield spread premium based on, or varying with, the terms of a residential mortgage loan," as well as requires certain licensing and registration requirements for mortgage originators.

The bill additionally establishes minimum repayment standards for mortgages; prohibits refinancing that does not benefit the borrower; holds securitizers liable for particular loan-related violations; and proscribes certain prepayment penalties, premium credit insurance, mandatory arbitration and negative-amortization loans.

H.R.3915 sets forth further requirements relating specifically to high-cost mortgages: Forbidden practices include "recommending default on an existing loan or other debt before and in connection with closing of a high-cost mortgage that refinances all or any portion of such existing loan or debt; (2) imposing late fees except according to specified requirements; (3) exercising sole discretion to accelerate indebtedness; (4) financing points and fees; (4) structuring certain transactions and reciprocal arrangements to evade the requirements and prohibitions of this Act; and (5) charging certain modification or deferral fees, and fees for notification of payoff information."


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