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(Washington) U.S. Congressman Sam Graves voted to bring needed common sense to mortgage lending late Thursday night. The House approved H.R. 3915, the Mortgage Reform and Anti-Predatory Lending Act by a vote of 291-127. The legislation curbs abusive practices and increase oversight of the mortgage industry.
“The mortgage market is affecting a lot of families and the economy,” said Graves. “This is not a perfect bill, but it is important to clamp down on predatory lending in the sub prime mortgage industry.
The bill requires mortgage lenders determine whether a borrower has a reasonable ability to repay the loan before extending them credit. This common-sense standard will discourage lenders from making bad loans without reducing the availability of mortgages to creditworthy borrowers. Reputable lenders should have no difficulty meeting such a standard, which has been previously adopted by Federal banking agencies in regulatory guidance applicable to all insured depository institutions.
“Duping home buyers into a loan that they cannot afford hurts everyone, except the lender,” said Graves. “Defaults hurt the economy and make it harder for other home buyers to find credit.”
This past year the U.S. housing market illustrated a significant increase in delinquencies and defaults among sub prime borrowers, leading to decreasing housing prices in regions across the country and turmoil in the mortgage finance sector. The American home loan market has $10 trillion in loans outstanding, the most ever, according the Federal Reserve. Sub prime mortgages made up about 20 percent of the mortgages issued last year and about 11 percent in the first half of 2007.
The bill passed the House and now heads to the Senate for its consideration.
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