We don't know how we missed this item in National Mortgage News back on August 13, but since problems in the mortgage industry are continuing, we'll run it on this slow news day, viathe miracle of Nexis:
Nine Democratic congressmen have introduced a bill to ban certain abusive lending practices and impose a fiduciary duty on mortgage brokers based on a predatory lending law the Minnesota Legislature passed earlier this year.
The bill bans no-document loans, prepayment penalties on adjustable-rate mortgages, “churning loans” with no economic benefit to the borrower and “steering” borrowers into high-risk loans.
The chief sponsor, Rep. Keith Ellison, D-Minn., said the bill addresses many of the flaws that currently exist in the mortgage lending process.
He also stressed at a press conference that the Minnesota Legislature passed these “strong consumer protections with overwhelming bipartisan support.” Furthermore, it was supported by a Democratic attorney general and signed into law by a Republican governor.
Minnesota’s bipartisan approach to predatory lending stands is a sharp contrast to Washington where Congress has been divided along party lines for years.
Three other Minnesota congressmen — Betty McCollum, Tim Walz and James Oberstar — are co-sponsors of the bill, along with Reps. Hank Johnson (Ga.), Barbara Lee (Calif.), Lynn Woolsey (Calif.), Lacy Clay (Mo.) and Emanuel Cleaver (Mo.).
Rep. Johnson warned that 1.5 million Americans will loose their homes to foreclosure this year and the situation will only get worse if predatory lending is allowed to persist.
“Predatory lenders prey on individuals either by luring them with low initial payments or unfairly steering them into high-risk loans,” he said at the press conference.
House Financial Services Committee chairman Barney Frank, D-Mass., held a hearing in Minneapolis on the effects of predatory lending and the foreclosure crisis on the Twin Cities of Minneapolis and St. Paul late last week (Aug. 9) after NMN went to press. . . .