House passes H.R. 1728, the Mortgage Reform and Anti-Predatory Lending Act

Yesterday the House passed H.R. 1728 by a huge margin of 300-114.  AFFIL’s Partners took slightly different positions on this bill.  Some chose to support it while offering ways the bill should be improved.  Others chose to oppose it, because of these same issues.  See their letters for and against the bill (both are PDF links).

Unlike most battles on the Hill, this bill actually improved as it made its way through the legislative process.  It is also substantially better than mortgage reform legislation passed in 2007.  (Perhaps the huge mortgage meltdown made an impression on the House after all.)

Bloomberg reports that the bill “strengthens rules for mortgage originators, brokers and securitizers to help ensure consumers don’t end up with home loans they can’t afford.”  Consumer advocates have been warning about unaffordable, exotic mortgages for many years.  As predicted, they are now defaulting at record rates.  The bill is designed to encourage traditional, fixed rate mortgages which are known to be safer.

However, from the consumer perspective H.R. 1728 is not perfect.  Its main weakness is that it does not create strong enough penalties for companies who break the rules.  This, of course, is a huge problem, because no matter how great the rules are, if companies don’t have to follow them nothing will change.

For more details, see our Partners’ letters for and against the bill (both are PDF links).