I thought it may interest some of you to review what has been going on in the United States Congress regarding Mortgage and Foreclosure law and issues in the last few months. Of these seven mortgage-related Acts listed below, only one appears to have passed. Since Realtors must be licensed, it makes sense to create a national mortgage licensing system and registry.
H.R. 3915 - Mortgage Reform and Anti-Predatory Lending Act of 2007
S. 1299 -- Borrower's Protection Act
H.R. 3838/ S. 2169 - the PROMISE Act of 2007
S. 2136 -- Helping Families Save Their Homes in Bankruptcy Act of 2007
S. 2136 -- Helping Families Save Their Homes in Bankruptcy Act of 2007
H.R. 3648/S.1394 -- the Mortgage Forgiveness Debt Relief Act of 2007/Mortgage Cancellation Relief Act of 2007
S. 2296 -- Mortgage Disclosure Enhancement Act of 2007
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Overview of Congressional Action on Mortgage Foreclosure* (as of December 10, 2007)
H.R. 3915 - Mortgage Reform and Anti-Predatory Lending Act of 2007
Status: Passed in the full House of Representatives 11/15/07 by a vote 291- 127. Introduced by Rep. Brad Miller,
with 27 cosponsors, including Rep. Barney Frank.
Summary:
· Establishes a national mortgage licensing system and registry and requires that any individual originating a loan be registered.
· Makes all mortgage originators subject to a federal "duty of care" that requires them to: be licensed and registered; work to present the consumer with a range of appropriate products; make full and timely disclosures. Requires the federal banking agencies and FTC to prescribe implementing regulations.
· No mortgage originator can receive any incentive compensation (including yield spread premiums) that is based on the loan unless expressly disclosed. Federal banking agencies with HUD and the FTC must issue regs that prohibit steering consumers to loans they can't repay or are not qualified residential loans, and prohibit unfair lending based on race, gender or age.
· Sets minimum standards for residential mortgage loans
· Creditor must make reasonable determination based on documented information that the consumer has an ability to repay the loan and, in the case of a refinanced loan, that there is a net tangible benefit to the consumer.
· Provides for a presumption that the standard in preceding bullet has been met for "qualified mortgages" and "qualified safe harbor mortgages".
· Gives consumers a legal cause of action against a creditor if the loan violates the minimum standard, except that upon notification from the consumer the creditor has 90 days to cure and conform to the minimum standard.
· This federal cause of action supercedes any State law that provides additional remedies.
· Requires the creditor to disclose prior to closing the maximum payment amount on a variable payment mortgage, if payments will increase to cover taxes and insurance, the aggregate amount of
settlement charges, closing costs, fees paid to the originator and other fees.
· Expands and codifies the definition of high cost loans in the Home Ownership and Equity Protection Act (HOEPA) to cover purchase money loans and open-end loans, points and fees over 5% for most loans and loans with prepayment penalties that exceed 2% or 36 months duration. Consumers with these types of loans would get the protections offered by HOEPA.
· Prohibits the following terms for high cost loans: extending credit unless creditor can reasonably expect the consumer can repay, prepayment penalties on loans with principal amounts below the FHA loan limit in that area, balloon payments unless adjusted to seasonal or irregular income of the consumer.
· Establishes the Office of Housing Counseling under the Secretary of HUD which will be responsible for establishing and coordinating all HUD counseling. Also authorizes $45 million for the Office, including for grants to States, cities and non-profits.
S. 1299 -- Borrower's Protection Act
Status: Introduced by Senator Schumer on 5/3/07. Bill has 6 cosponsors.
Summary:
· Amends the Truth in Lending Act to create a fiduciary relationship between a mortgage broker and consumer. Subjects each such mortgage broker to all federal and state requirements for fiduciaries. Also creates a good
faith and fair dealing standard of care for all mortgage originators.
· Requires a mortgage originator, before entering into or otherwise facilitating a home mortgage loan, to verify the borrower's reasonable ability to pay the principal and interest, real estate taxes, and homeowners'
insurance fees and premiums.
· Prohibits no-documentation loans and requires originators to base their assessment of ability to pay on documentation such as tax returns, payroll receipts, bank records or other similarly reliable documents.
· Makes the lender liable for acts, omissions, and representations of a mortgage broker in connection with any rate spread mortgage loan the broker sells or delivers to the lender.
· Prohibits a mortgage originator from steering a consumer to home mortgage loan rates, charges, principal amount, or prepayment terms not reasonably advantageous to the consumer.
· Prohibits a mortgage originator from: (1) seeking to influence an appraiser or otherwise to encourage a targeted value; or (2) selecting an appraiser on the expectation that the appraiser would provide a targeted
value.
· Requires the mortgage originator to provide a copy of the appraisal report to a home mortgage loan applicant, whether credit is granted, denied, or the application was withdrawn.
H.R. 3838/ S. 2169 - the PROMISE Act of 2007
Status: Two companion bills -- The Promoting Refinancing Opportunities for Mortgages Impacted by the Subprime
Emergency Act of 2007 (the "PROMISE Act") -- introduced in Senate by Senator Schumer, S.2169, and by Rep. Barney Frank in the House, H.R. 3838.
Summary: The bill would temporarily raise portfolio caps applicable to Freddie Mac and Fannie Mae by 10%. 85% of
the increase (approximately $125 billion) would be required to fund refinancing of subprime borrowers.
S. 2136 -- Helping Families Save Their Homes in Bankruptcy Act of 2007
Status: Sponsored by Senator Durbin introduced 10/3/07 - currently has 7 cosponsors.
Summary: Allows bankruptcy judges to alter mortgage terms in order to help a borrower keep their home. Mortgage
loans are the only types that bankruptcy judges currently don't have the ability to restructure.
H.R. 3648/S.1394 -- the Mortgage Forgiveness Debt Relief Act of 2007/ Mortgage Cancellation Relief Act of 2007
Status: H.R. 3648 introduced by Rep. Charlie Rangel with 25 co-sponsors. Passed the full House by a vote of 386
- 27 on October 4, 2007. S. 1394 introduced by Sens. Stabenow and Voinovich - 12 cosponsors.
Summary: Amends the Internal Revenue Code to exclude from gross income any principal that a bank forgives in
restructuring a loan if the write-down is the result of a decline in value of the residence.
S. 2296 -- Mortgage Disclosure Enhancement Act of 2007
Status: Introduced by Senator Schumer 11/1/2007.
Summary: Amends the Truth In Lending Act to require additional mortgage loan disclosures by a creditor to a
consumer, including:
(1) ) the percentage of the loan, as compared to the appraised value of the property;
(2) the term of the loan;
(3) the monthly income of the borrower, as relied upon in making the loan;
(4) the annual percentage rate of interest for loans that are fixed, and for loans that are variable;
(5) prepayment fees; and (6) balloon payments.
Central A/C
