Is Dem’s “bipartisan” predatory lending bill good for Cleveland? Well…
HR 3915, the “Mortgage Reform and Anti-Predatory Lending Act of 2007″, passed the House today by a vote of 291-127. Not one Democrat voted against it. The bill — to require licensing of mortgage brokers and set new standards for mortgage origination — was put together by House Financial Services Committee Chairman Barney Frank with the help of the committee’s senior Republican, Spencer Bachus, and co-authors including Ohio Repubs Deborah Pryce and Steve LaTourette. Its Ohio cosponsors included LaTourette as well as Dems Stephanie Tubbs-Jones, Betty Sutton and Marcy Kaptur. (Here’s Tubbs-Jones’ statement of self-congratulation.)
I haven’t checked to see if Rosemary Palmer has her indignant press release posted yet, but if not, she soon will, because Dennis Kucinich didn’t cast a vote on the bill. (In Las Vegas for the presidential debate? I suppose.) In this case, I’m going to have to agree with Palmer’s inevitable outrage. My Congressman should have been on the House floor today — but not to vote for HR 3915.
He should have been there to point out that, while this bill may be a workable gimmick for Congressional Democrats (and a few Republicans) who need to show they’re doing something about mortgage fraud and the subprime debacle, it will do little to help — and may actually obstruct — real community efforts to keep our neighbors in their homes, stop the death cycle of “flip-foreclose-flip”, and rebuild our damaged neighborhoods.
Before the vote today, nineteen organizations led by the National Consumer Law Center delivered a letter to all Members of Congress. The signers included Cleveland’s Housing Research and Advocacy Center, the Cuyahoga County Foreclosure Prevention Program, and National People’s Action, a national coalition of community organizations including Cleveland’s ESOP. These are people, please note, who actually counsel, represent and organize the thousands of victims of subprime scams and mass foreclosure, in our “epicenter” city and elsewhere.
The letter, addressed to Reps. Frank and Bachus, reads in part:
We write to express our opposition to H.R. 3915, the Mortgage Reform and Anti-Predatory Lending Act of 2007. We greatly appreciate your efforts to reduce predatory lending and to restore balance to the mortgage market, however the bill will not stop predatory lending if it passes in its current form. Unfortunately, the weak remedies and damaging preemption in the bill leave us no choice but to oppose it.
… the remedy and preemption provisions in Title II, as well as the revised language regarding disclosures for higher rates caused by yield spread premiums, outweigh any protections the bill otherwise might provide. The bill insulates those that hold the loans, the very parties that funded these abusive products and created a market for predatory loans. Moreover, there are multiple hoops through which the homeowner has to jump to obtain any redress for violations of these new federal protections against securitizers or other parties, and these are primarily limited to borrowers already in foreclosure. Most importantly, the various safe harbors in the bill provide little or no incentive for the market to change.
Further, the bill contains a damaging preemption provision that eliminates homeowners’ ability to raise key state claims against any assignees. Despite efforts to narrow the provision, the current language appears to prevent homeowners from asserting state common law and statutory claims that are at the heart of most current, meaningful litigation and foreclosure defense actions on behalf of consumers: unconscionability, unfairness and contract claims.
Here’s the NCLC’s short analysis of HR 3915, explaining why it considers the bill “an empty promise”.
State governments also have serious problems with the bill, especially the provisions that insulate mortgage securitizers (the banks and investment houses that buy mortgages from the original lenders and package them into billion-dollar investment pools) from state law and litigation. At last Friday’s foreclosure strategy conference in Cleveland, Ohio Attorney General Marc Dann, who’s got plans for lots of legal action aimed at all parties in Ohio’s subprime mess including the securitizers, publicly expressed his frustration with the Democratic leadership’s willingness to undercut state enforcement powers in order to placate Wall Street — though he hoped he and other AGs had headed off some of the most damaging preemption language.
HR 3915 goes to the Senate now, where there’s no companion bill yet, and Chris Dodd at the Banking Committee has his own ideas. Of course mortgage brokers, who unlike their Wall Street enablers are actually targeted by the bill’s licensing and lending provisions, remain bitterly opposed. So do most Republicans. So the Mortgage Reform and Anti-Predatory Lending Act is a long way from becoming law.
Which, from the perspective of the people struggling for some justice in the trenches of Cleveland’s Foreclosure Wars, is probably just as well.
(Sherrod, can we talk?)