Beginning this afternoon, the House of Representatives will be voting on two bills that would open the door to costlier and trickier mortgage loans, undermining new rules intended to prevent more of the kind of predatory practices that wrecked the housing market and the economy in 2008.
These rules were put in place to stop abuses that devastated our communities. Now some lenders want to roll them back. Tell your representative not to let them.
The first of these bills, HR 685 (the “Mortgage Choice Act”), creates a loophole that would allow some higher-fee mortgages to gain special legal protection, despite those higher fees. It would do so by reversing a longstanding practice, in reckoning the cost of the loan, of counting all the fees charged by the lender or any of its affiliated companies. More specifically, it would exclude fees charged by title insurance companies connected with the lender. Title Insurance is a product rife with abuses – 70% of the cost of insurance goes to “commissions,” which are essentially kickbacks to the lender for using that insurer. Borrowers pay hundreds, or even thousands, of dollars more on every home loan because of title-insurance abuses. HR 685, by not counting these fees, would reinforce those problems. (See Center for Responsible Lending fact sheet for more information on HR 685.)
The second bill, HR 650 (the “Preserving Access to Manufactured Housing Act”), would remove important consumer protections on manufactured housing loans, making homeownership more costly for those who can least afford it. By raising the threshold for certain consumer protections established by the Consumer Financial Protection Bureau, HR 650 would effectively allow interest rates of nearly 14% on a 15-to-20-year manufactured-home loan, without triggering high-cost loan protections. This compares to the going rate of about 4% on a traditional home mortgage. (See Center for Public Integrity article for more on HR 650.)
Send a message to your member Congress: stand up for families. Don't roll back mortgage protections.
Every vote on these bills is going to matter, so please take a few minutes to urge your Representative to oppose these financial deregulation proposals. Both bills are – unfortunately – almost sure to pass the House, but that will not be the end of the story. Every additional “No” vote will improve our chances of stopping them in the Senate, and make it easier to press the President to veto the bills if they move forward.
Americans for Financial Reform