Industry News

Congress drafting bills aimed at predatory lending

Industry has opposed past proposals to expand HOEPA

Democratic lawmakers are drafting bills that would impose new restrictions on mortgage lenders and loan servicers. The bills would ban yield-spread premiums and prepayment penalties on higher-priced loans, and increase liability for mortgage brokers and investors who buy securities backed by mortgage loans. Sen. Christopher Dodd -- a presidential hopeful and chairman of the Senate Banking Committee -- released details of a proposed bill Wednesday that has the endorsement of groups including the NAACP, the AARP, and the Center for Responsible Lending. The bill proposed by Dodd, D-Conn., would expand the Homeownership and Equity Protection Act (HOEPA) to cover more loans, and create good faith and fair dealing requirements for lenders and brokers. Rep. Barney Frank, D-Mass., is reportedly proposing similar measures in a draft bill now being circulated, and wants to see investors who buy mortgage loans made liable for practices defined as predatory. Consumer groups includin...