WASHINGTON — Efforts to alleviate the troubled mortgage market and head off future problems with the subprime market are keeping the congressional schedule full these days.
The Mortgage Reform and Anti-Predatory Lending Act of 2007 (H.R. 3915) was slated for a full House vote last Thursday after press time. The bill would create a national licensing standard for non-federally regulated lenders and a registry of depository financial institutions that perform mortgage lending. It would also prohibit prepayment penalties and the financing of points and fees, which can be abused. The Federal Credit Union Act prohibits credit unions from charging prepayment penalties.
The Rules Committee is expected to set limits on amendments. CUNA Vice President of Legislative Affairs Ryan Donovan said Congressman Paul Kanjorski's (D-Pa.) Escrow, Appraisal and Mortgage Servicing Improvement Act (H.R. 3837), which has sometimes been paired with H.R. 3915, could be offered as an amendment. The bill would establish national appraisal independence standards with tough penalties, improve federal oversight of state appraisal regulators, and strengthen appraiser licensing and education standards. It would also enhance borrower protections.
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The continuation of the mark up in the House Judiciary Committee of H.R. 3609, Emergency Home Ownership and Mortgage Equity Protection Act of 2007, was initially scheduled for last Thursday but has been postponed. The bill has stirred opposition from much of the mortgage lending industry as it would permit bankruptcy judges to restructure the terms of a mortgage in a Chapter 13 proceeding.
NAFCU President/CEO Fred Becker wrote the committee on the eve of the initial Nov. 7 mark up, "We believe that such broad based coverage of all mortgages and home equity loans by the Emergency Home Ownership and Mortgage Equity Protection Act of 2007 will create greater uncertainty in the mortgage market and likely lead to higher costs to credit union members."
According to NAFCU, the Judiciary Committee may try to schedule a mark up again when Congress returns in December after the two-week Thanksgiving recess.
Senior Vice President of Government Affairs Dan Berger said that several members are working on compromise language for H.R. 3609. NAFCU's lobbying team is working with Congressman Brad Sherman (D-Calif.) on an amendment to exempt prime mortgages–defined as those within 3% of the Treasury rate–from the restructuring options. Primary sponsor Brad Miller (D-N.C.) said he would consider a sunset provision during a previously held hearing.
CUNA is following the bankruptcy legislation but has not yet formulated a policy.
Three former banking regulators–former Comptroller of the Currency Robert L. Clarke (1985-1993), former FDIC Board Member and Chairman William Isaac (1978-1985), and former FDIC Chairman Donald Powell (2001-2005)–weighed in against the legislation. "The proposed legislation would add a great deal of uncertainty to an already volatile and illiquid housing market, and the last thing the markets need now is more uncertainty," they wrote.
CUNA and NAFCU lobbied hard for a decade for the bankruptcy reform bill that moved more filers into Chapter 13 workout agreements.
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