House Bill Includes Baca Amendment Calling for Better Disclosure from Lenders

Washington, DC –  Rep. Joe Baca (D-Rialto) today joined a bipartisan majority in the House of Representatives in passing the Mortgage Reform and Anti-Predatory Lending Act of 2007 (H.R. 3915).   The bill, which stabilizes the housing market by expanding affordable mortgage loan opportunities and strengthening consumer protections, passed the House by a 291 – 127 vote.

H.R. 3915 includes an amendment, authored by Rep. Baca, that requires mortgage lenders provide earlier and better disclosure of key mortgage terms to borrowers before closing. 

“Too many families in the Inland Empire have fallen prey to predatory lenders because of bait and switch tactics,” said Rep. Baca.  “My amendment ends this deceitful practice by ensuring that consumers receive better and earlier disclosures so they can have a fair chance to shop for the best loan.”

The Baca amendment ensures consumers receive an early disclosure of key loan terms and the maximum possible payment to compare loan costs before closing.  Current law only requires that this disclosure of cost be provided “before consummation”.  In most cases, this information is not provided in advance, and consumers only see final terms at closing.  The Baca amendment enhances consumer protections by mandating that the terms of mortgage and refinance loans must be given to the consumer at least 7 days before closing.  If the terms are no longer accurate, the lender has up to 3 days before closing to send the consumer the corrected statement, or else they are subject to statutory damages. 

“Many consumers who took out adjustable rate mortgages didn’t realize the impact of variable interest rates on their monthly payments until it was too late,” added Rep. Baca.  “The disclosure requirements in my amendment will hold lenders accountable and give consumers better information earlier in the mortgage process.”

In addition to better and earlier disclosure, H.R. 3915 takes other measures to restore integrity to the mortgage lending industry.  The legislation forces the mortgage industry to follow basic principles of sound lending and consumer protection by:

•    Ensuring that borrowers can repay the loans they are sold;
•    Ensuring that borrowers are not “steered” into more expensive mortgages;
•    Strengthening special consumer protections for high-cost loans; 
•    Requiring that all mortgage bankers and bank loan officers are licensed or registered; and
•    Creating an Office of Housing Counseling within HUD to boost homeownership and rental                 housing counseling.

Currently, the percentage of loans entering foreclosure is at its highest level in 55 years.  Estimates show one in every 43 households in San Bernardino and Riverside County is undergoing foreclosure.

“Earlier this month, I hosted a town hall meeting in my district to assist those individuals and families suffering because of the current mortgage crisis,” concluded Rep. Baca.  “Today’s bill takes an important step in ending predatory lending once and for all.   I will continue to work for better consumer protections and more honesty in the lending process, so none of our communities will again face a catastrophe of this magnitude.”

Rep. Baca serves on the exclusive House Financial Services Committee, which played a pivotal role in crafting and amending the Mortgage Reform and Anti-Predatory Lending Act.