Providing for consideration of the bill (H.R. 1728) to amend the Truth in Lending Act to reform consumer mortgage practices and provide accountability for such practices, to provide certain minimum standards for consumer mortgage loans, and for other purposes.

I thank the gentlewoman.

As I rise today, before I begin my formal statements, I would like to acknowledge that the gentleman, Mr. Frank, the chairman of the committee, has come to the floor, and I want to personally thank the gentleman for engaging with me and perhaps other members of the Republican Party on working on this bill. I want to personally thank the chairman for that engagement and believe that it will result in the opportunity for Republicans to have a better say on the bill that will be before the House today, and I want to personally thank the gentleman.

Madam Speaker, I do rise today, however, in opposition to H.R. 1728, which is the majority's misled attempt to bring stability back into the mortgage market. As the American people will soon see, many provisions of the bill are a destructive force to both the lending industry and, in turn, the American homebuyer.

First, the new Federal Reserve regulations already exist and are about to be implemented in October of this year, which means that this work on predatory lending has already taken place.

Second, this bill establishes a new group of qualified mortgages, which limits consumer choice of mortgages and unduly burdens the mortgage industry.

Third, it establishes new credit risk retention rules, which dramatically limit the successful functioning of the secondary market, especially small, nonbank lenders.

And, fourth, it authorizes a $140 million slush fund for legal defense funds.

Last July, the Federal Reserve issued new regulations under the Home Ownership and Equity Protection Act which implemented many provisions of the predatory lending legislation of Congress last year. As part of this implementation, new Federal rules have been developed which address predatory practices and products, bringing an end to a variety of issues which have haunted the subprime market, such as poor underwriting standards. These rules already are set to take effect in October of this year.

My colleagues from both sides of the aisle understand that these new regulations will soon be in effect, and certainly cleaning up the lending industry is important. Even Chairman Frank has previous knowledge, and I quote, that ``the Federal Reserve has adopted regulations so that the predatory and deceptive lending practices that led to the subprime crisis will be prohibited,'' already done.

But rather than allowing the Fed's carefully constructed regulations to take effect, this new majority has decided to draft their own mortgage reform bill with their own unique twist. Unfortunately, this twist includes new and untested mandates and duties, that even if they can be implemented, they may end up punishing the very consumers that this majority party is trying to protect.

My question is simple: Why is Congress meddling with regulations that will soon yield significant and expected benefits in combating mortgage fraud, eliminating the bad actors of the industry, and providing greater protection to the consumer?

While this legislation attempts to correct past excesses in the mortgage market by establishing new standards for mortgage origination, and imposing greater legal liability on the secondary market, this bill, in fact, injects legal uncertainty into the lending process, thereby raising the cost and reducing the availability of mortgage credit to consumers. Allowing a slush fund for people to sue is a prime example of what we are talking about. I would like to say this is an unintended consequence. I think it's an intended consequence.

One of the primary provisions which contribute to the higher cost and reduced availability of loans is the misconstrued establishment of a new class of loans called qualified mortgages. Any loans deemed as qualified mortgages are, in theory, protected under the bill's limited safe harbor and are exempt from the new lending risk retention requirements.

All other nonqualified mortgages are excluded from this safe harbor and siphoned into the category of subprime mortgages. In turn, any lender can be sued for selling nonqualified mortgages.

The kicker, however, is that H.R. 1728 makes all real safe harbor mortgages rebuttable, meaning that borrowers can sue any creditor for any mortgage.

Under the terms of this bill, no mortgages are protected by safe harbor laws and all lenders can be sued. That is going to have a direct and devastating consequence on the marketplace.

When the bill was introduced in Congress, the last Congress, the bill appropriately filtered most mortgages into three types of loans. For the sake of explanation, let's call them green, yellow and red mortgages.

Green light mortgages are good, traditional, protected mortgages. Yellow light mortgages are potentially hazardous mortgages. In this case, the consumer has the right to sue for loss in the case of predatory lending, while the lender maintains the right to a fair defense.

Lastly, red mortgages are simply mortgages presumed bad and the law allows the consumer to sue for any loss.

Unfortunately, according to this year's version of the bill, the law will only allow for green and red light mortgages, and, most importantly, neither of them will have a real safe harbor because borrowers can sue any creditor for any mortgage. Regardless of how safe and affordable and how well an alternative mortgage may have served the borrower, lenders will begin making fewer and more expensive loans out of fear of being sued.

At the end of the day, what is the purpose of this mortgage reform? A

government-mandated mortgage structure enforced by the very taxes paid by the American homeowner, or providing for consumer choice of loans which best suits the needs of responsible homebuyers with the assurance of meaningful customer protection? I think we can see what we are going to get.

Madam Speaker, I have a concern also with the new ``credit risk retention'' requirements. This provision will force any loan originator to hold 5 percent of any mortgage that does not fit the bill's narrow safe harbor, what is known as the ``qualified mortgage.'' The ``credit risk retention,'' as it is referred to, requirement is a far-reaching requirement that leaves my colleagues and me confused as to how certain groups, such as smaller lenders, will even survive.

The fact stands that many smaller nonbank lenders do not have the same reliable sources of funding as depository institutions. These lenders would be unable to compete, let alone to operate, at a competitive level. They simply cannot compete. Additionally, this provision will necessitate that larger lenders increase their capital. This is the wrong approach during a time when the government is concerned that lenders are insufficiently capitalized; moreover, during a time in which the government is making the taxpayer pay for these insufficiencies. David Kittle, chairman of the Mortgage Bankers Association, testified in front of the Financial Services Committee on April 23 of this year. And here is what he said, ``at a time when policymakers are focusing so much of their efforts on injecting capital into the financial services sector, this provision would force an inefficient use of capital across all types of institutions and threaten to further impair their ability to lend at all.'' This will simply narrow choices, lessen credit and increase costs for borrowers and taxpayers, as well as increasing lawsuits.

While a critical element of mortgage reform should be giving incentives for greater accountability to lenders without damaging the mortgage market, H.R. 1728 imposes huge liability on all groups involved in issuing a loan while circumventing any investor liability. Unfortunately, the bill magnifies the already substantial legal risks faced by participants in the mortgage market, dramatically reducing any incentives for lenders to partake in the mortgage market.

And as if new litigation were not enough, this bill authorizes $140 million for legal assistance grant funds to legal organizations to provide taxpayer-funded legal defenses for homeowners in default or facing eviction. Simply put, this bill sets up lenders for failure by burdening them with undue liabilities and funding trial lawyers. This bill lacks the key taxpayer and lender protections, opening the door to taxpayer-financed frivolous civil lawsuits which will ultimately ruin the mortgage industry. I'm sure it will empower a bigger Federal Government, however.

Additionally, this bill subjects the taxpayer to involuntarily funding groups like ACORN, who will be eligible for receiving grants from this legislation. My colleague from Minnesota was able to add a provision which sufficiently blocks any organization that has been indicted from receiving any funds--for example, ACORN. Unfortunately, the majority is actively making efforts to reopen groups like ACORN to taxpayer funds with no regard for past indiscretions.

Restructuring the mortgage industry is essential in returning safety and security to the housing industry. We don't debate that. Unfortunately, the majority party is choosing to streamline an overzealous mortgage bill without allowing the Federal Reserve regulations to first go into effect, not to mention the destructive nature of this bill on the lending industry and what the impact of this bill will have on every single American who is striving for the dream of homeownership, namely, making it more expensive and less available to those people who need it the most.

H.R. 1728 is a jackpot for trial lawyers, kryptonite for the mortgage industry, and ultimately crushes dreams of homeownership for many Americans. Therefore, Madam Speaker, I oppose the rule and the underlying legislation, and I hope my colleagues do the same.

I reserve the balance of my time.

Madam Speaker, I find myself in a position of making sure that this body does understand that lots of debates have taken place. I know the gentleman, Mr. Frank, has been on the committee for a long time and has argued very vehemently for years that the crisis was not about to happen, that the crisis and the changes that were made to Fannie and Freddie and subprime mortgages and all these things, that there was no crisis that was getting ready to happen. And I would respectfully say to the gentleman, it seems like Mr. Greenspan agreed with that. Something did happen. And it is up to us as thoughtful Members to make sure that we appropriately then take action where necessary. This was done last year. The Federal Reserve understood it, went through a deliberative process, took feedback from the industry and took feedback from consumers. The damage had been done.

We are now talking about predatory lending. We are not talking about what got us in the problem in the first place. We are talking about now that people are in trouble, how do we help save them? How do we help work with them? How do we make sure that the system properly works not just for people who might be in trouble, but people who might be in the future? The Federal Reserve has already done this. We already know that those rules will take place in October.

What I would argue with the gentleman about is going then too far, not doing something. I wouldn't argue with the gentleman. The gentleman is really very thoughtful in much of what he does. But the legislation will narrow choices, lessen credit and increase costs for borrowers and taxpayers. And at some point there has to be some balance. We are in agreement that we ought to move forward, that we ought to do things, that the laws that will take place through the regulation of the Fed are proper, necessary and needed. But we are not for making lawsuits a better part of what we are doing, providing money for people to sue, narrowing choices, lessening credit and increasing costs. And that is our decisionmaking point where we disagree with not only this legislation but perhaps moving this bill in the first place.

I reserve the balance of my time.

Madam Speaker, you know, two points: first of all, we are sitting here blaming each other. I hope I am not doing that about the past. We were talking about today's bill, the right way to balance what needs to be done now with the understanding that the Fed has already acted, notwithstanding whether the gentleman, Mr. Frank, thinks that they should have acted or whether the chairman of the Fed should have done something. The bottom line is that the gentleman was right there with him the whole time. ``There is no problem. There is no systemic risk.'' And that was the constant message that we heard from the gentleman, Mr. Frank, about the same big issue.

But I would like to take issue with one point, and that is Republicans have done nothing. Well, I would like to say that there was Republican-authored legislation called the SAFE Act. And the SAFE Act which created licensing and registration for the mortgage industry was enacted last year.

The Conference of State Bank Supervisors had called ranking member, oh, yes, he is a Republican, Spencer Bachus' bill ``the most significant mortgage reform in years.''

So let's be a little bit clear: Republicans were not here doing nothing. Our friends, the majority party, were offering public comment about what was not going to happen, and the subprime mortgage effort did happen. And now what we are trying to do is work with a set of rules and regulations that have been agreed to by the Fed, well understood, and the industry as well down the line to make sure this October we know what those rules are. And now we are going to have our friends in the majority party to overlay new rules that empower trial lawyers that will narrow choices, lessen credit, and increase costs. There has got to be some balance.

Mr. Speaker, I would argue today that notwithstanding the gentleman from Massachusetts (Mr. Frank) and the gentleman from Alabama (Mr. Bachus) and the gentleman from Texas (Mr. Hensarling), who has been mentioned a couple of times, have been very active for 6 or 8 years on this issue. Doing nothing would not be an accurate description. Saying that Republicans blocked attempts would not be a correct assertion. But saying that there has been work in the aftermath to try and do the right thing that is right on target already exists and we don't need to add to that would be equally true also.

I reserve the balance of my time.

Mr. Speaker, I am very pleased to engage the gentleman, and I appreciate him doing this. But, Mr. Speaker, my point would be the gentleman is trying to get into a political argument especially about how I may or may not have voted. He supposes I would have voted against the bill because it was a reasonable bill. I think that is what he is trying to say. I don't know how I voted on the bill, this section of the bill, at all.

What I would say to you is that you can't have it both ways. You can't say Republicans did nothing and then say, oh, Republicans, a handful of Republicans did something, but the vast majority of Republicans voted against it. That is, Mr. Speaker, trying to take what we are attempting to do here today, making public policy wise choices in the open, and by the way, Republicans are for doing this on the floor to talk about every amendment, to talk about the processes, to talk about the expectations of performance, to talk about what we expect the laws to do; and now he is trying to have it both ways to say, I guess it was a Republican idea, but most Republicans opposed it. It was a Republican idea by the ranking member of Financial Services, Spencer Bachus, who is a Republican, and who moved forth in those responsibilities an opportunity for something to become law. And it is obvious the gentleman, Mr. Frank, at the time was willing to engage in that, and that should make all of us feel good.

But I don't think we should turn around later and diminish that effort just because we want to make political points here today. And I don't mind making political points because here are the political points I would make: today we are going to narrow choices, lessen credit, and increase costs for borrowers and taxpayers. We are going to provide at a time when our country should be trying to lessen spending of money, we are going to provide an extra $140 million for people to go sue in court to overload our courts when resolution should be done by the legislation, but in fact also by the rules that are already provided by the Federal Reserve.

Republicans aren't here just to say no and to come to fight. We are after good public policy. We are after public policy that will work for people and a marketplace so there are lenders in every single community.

This bill that we are here today on will lessen, take away the number of qualified lenders who are available because now the costs are going to go up, fewer consumers will be able to get the loans and will pay more money because now we are going to give from the Federal Government $140 million to go sue somebody.

Legislation should be about finding a balance. I'm not opposed to remedies. I'm not opposed to courts and people litigating for the right reasons. I am simply not interested in now that it is over, trying to find a way to beat up people when resolution, keeping people in their homes, finding a way for that balance to work.

And today we will give full credit to Mr. Frank. He wants political credit; let's give him full political credit. All the Democrats will get full political credit today for doing essentially two things: number one, reworking what is already laws that are going to begin in October by the Federal Reserve; and, secondly, we will give you credit for these principles, narrowing choices, lessening credit, and increasing costs for borrowers and taxpayers. Making it more difficult at a time when America and Americans need the chance to go get a home loan, we are now going to add more rules and regulations to the mortgage industry.

This is exactly where Republicans do draw the line. We are for well- balanced, well-meaning, thoughtful articulation on this floor to make sure we understand what we are doing. We are not for suing people and not for adding costly rules and regulations. The industry has already told us that is exactly what the intended outcome of this bill will be.

I reserve the balance of my time.

Mr. Speaker, I appreciate this one-sided debate about how bad Republicans are, how we did nothing; but I believe the gentleman has already well answered that question and heard it that Republicans in fact have been proactive during this entire time.

Mr. Speaker, I include for the Record a letter dated May 5, 2009, from the Mortgage Bankers Association whose title is ``Investing in Communities.''

Mortgage Bankers Association,

Washington, DC, May 5, 2009.

Hon. Nancy Pelosi,

Speaker of the House, U.S. House of Representatives,

Washington, DC.

Hon. John Boehner,

Republican Leader, U.S. House of Representatives, Washington,

I want to thank not only the gentlewoman for extending the time, but also the gentleman, Mr. Frank, for engaging in this issue.

Mr. Speaker, testifying to the Financial Services Subcommittee on behalf of a coalition of consumers, advocacy groups, and labor organizations from across the country, Margaret Saunders of the National Consumer Law Center, called this bill ``convoluted and virtually impossible as a mechanism to solve the current problem.'' Convoluted and virtually impossible as a mechanism to solve the current problem.

We need to go back to the drawing table and remove many of the political provisions which will only cause further damage in the marketplace. It will further damage a fragile mortgage market that is in need of greater certainty, not more uncertainty.

This afternoon in the Rules Committee, my friends on the other side of the aisle will have an opportunity to allow for quality changes to the underlying legislation, opportunities for Members of this body to hear debate and vote on amendments. I encourage an open rule, which will be an open and honest discussion just like we've had here on the floor today, on the discussions that the House will handle tomorrow.

With respect to the 50-plus amendments to the legislation that were submitted to the Rules Committee yesterday morning, we'd like to see them all be made in order. Congress has an opportunity to provide for quality, meaningful returns, and to help the current mortgage lending process, and it is my hope that my Democrat colleague friends will allow for that process.

With that, I oppose this rule and look forward to a better rule tomorrow. As always, I think that a better rule tomorrow, an open rule, will yield not only the intended results, but will help the American people to know what we intend to do with this legislation.

I yield back the balance of my time.

Madam Speaker, I am grateful for this very clear delineation of the Republican philosophy, ``do nothing about subprime mortgages.'' Now, the gentleman from Texas did say, well, the Federal Reserve is doing it. Understand that in 1994, a Democratic Congress gave the power to the Federal Reserve to promulgate those regulations. Alan Greenspan refused to use them. From 1995 on, he refused to use them.

At some point in the late 1990s and the early part of this century, it became clear to many of us, led by my colleagues from North Carolina, Mr. Miller and Mr. Watt, that we had problems in the subprime area. And people tried to get Mr. Greenspan to do it, and he wouldn't do it. So we then said, ``okay, we had better act legislatively in the absence of the Federal Reserve doing it.'' We were blocked from doing it by the Republican leadership of the House.

The gentleman from North Carolina (Mr. Watt), the gentleman from North Carolina (Mr. Miller) and I tried to get some legislation. Some Republican Members were ready to cooperate with us. But the decision came from the Republican leadership ``no.'' So from 1994, when Congress voted authority to the Federal Reserve, until 2007, after the Democrats had come back into the majority, nothing was done to block subprime mortgage abuses. Nothing. And not a single piece of legislation came forward when the Republicans were in control.

Now, I would add, by the way, that in 2007 we did a bill, we had some bipartisan cooperation, not a majority of Republicans, the bill passed the House but failed in the Senate. It didn't come up. Now we are doing it again. At no point have we seen a Republican alternative. The gentleman from Texas had some criticisms. We have never seen a Republican proposal to deal with subprime mortgages. Now they might say, ``well, we are in the minority, what is the point?'' But they were in the majority, Madam Speaker, from 1995 to 2006.

The gentleman from Texas (Mr. Hensarling) submitted an amendment to the bill which talks about how subprime mortgages skyrocketed in percentage from 2002 to 2006 under the Bush administration and under Republican control of Congress. Members on the Democratic side said, ``let's do something it about it.'' The Republican answer was ``no.'' So we have here the clearest demonstration of the Republican approach of ``do nothing.'' But then the gentleman said, ``oh, no, the Federal Reserve has done it.'' Well, first of all, understand the inconsistency between conservative attacks on the undemocratic nature of the Federal Reserve in some context and the decision to allow Congress to let them legislate instead of the Congress.

The notion, we heard it on credit cards and we heard it today, the notion that the elected officials of this country should not intrude when the Federal Reserve has proposed legislation turns democracy on its head and is wholly inconsistent with other arguments we get. Beyond that, while I appreciate what Mr. Bernanke has done----

Mr. Bernanke, to his credit, repudiated the no-regulation, extreme conservative philosophy of Mr. Greenspan and promulgated rules, but only after a Democratic Congress began to act on this. And I think he did a good job and deserves credit.

The problem is that there are things he cannot do. The Federal Reserve cannot change statute. So, yes, this bill goes beyond what the Federal Reserve did. I'm glad the Federal Reserve is doing it. I'm glad that Mr. Bernanke reversed the Greenspan position which had been supported by the Republicans to do nothing. We will debate individual cases of this. As to legal services, yes, we have had examples of individuals being evicted, being foreclosed inappropriately. What this does is to say that they can get some legal help.

This is a defensive measure for people who are going to be losing their homes. And we found that there were some problems there.

As to securitization, we will get into this. But, yes, I do agree we have people who have come to us and said, ``you know what? We don't have any money. Why don't you let us make loans?'' Well, we don't think people should be lending money they don't have and immediately selling the loans. Here is the point, Madam Speaker, we will get into it later. The extension of loans to people who shouldn't have gotten them, partly the fault of the borrowers, partly the fault of the lenders, whatever the reason, that was the single biggest cause of the subprime crisis.

And the record of the Republican Party, from taking office in 1995 until today, is to oppose overwhelmingly any effort to do anything about it, from Mr. Greenspan's refusal to use the authority he was given to the failure of the Republicans to this day to come forward with any constructive legislative alternative. So, yes, there might be room for debate, but as between doing something to prevent this and doing nothing, I believe ``something'' wins.

Madam Speaker, the gentleman from Texas is wrong to say we didn't want action. Yes, in the early part of the century we thought there wasn't a crisis. We tried to get Alan Greenspan to use the authority we gave him.

In 2003 I said that Fannie Mae and Freddie Mac were in crisis, as I didn't think they were, as Wachovia wasn't and Merrill Lynch.

In 2004, the Bush administration ordered Fannie Mae and Freddie Mac significantly to increase the subprime mortgages and low-interest mortgage rates. At about that time, and as Mr. Hensarling's amendment shows, it was around that time that the Bush administration presided over a great increase in subprime mortgages.

Beginning in 2003, we tried to get legislation adopted, and the Republicans said no. The Republicans wouldn't do it. It wasn't until 2007 that there was any action at all. And it is not a coincidence that the Fed was given authority under a Democratic Congress in 1994 and didn't exercise it until a Democratic Congress came back in 2007. Yes, I was in the Congress. I was in the minority, and I was frustrated by the failure of the Republicans to do anything.

Now under Mr. Oxley, he did try to amend the rules to regulate Fannie Mae and Freddie Mac, and a bill passed the House in 2005. I voted for it in committee, but opposed it on the floor because it restricted organizations like the Catholic Church from participating in affordable housing. But the bill failed after 2005. The bill to regulate Fannie Mae and Freddie Mac, which passed the House, where I served, it died later on in part because, as Mr. Oxley has made clear, the Bush administration and he got into a disagreement.

So the Republicans had authority to pass bills on Fannie Mae and Freddie Mac and subprime lending for 12 years and did nothing. We, in 2007 when we came into the majority, very promptly passed a bill to regulate Fannie Mae and Freddie Mac and to regulate subprime lending over consistent Republican opposition.

Mr. Speaker, first I reiterate, yes, I did say

in 2003 I didn't think we had a crisis. As the Bush administration increased the number of subprime loans that it required Fannie Mae and Freddie Mac to take, and as we saw the subprime crisis, I said we did have one and pushed for legislation. But most importantly, the gentleman referred to what is called the SAFE Act. It did not pass as a standing bill. First of all, during the period when the Republicans controlled the House for 12 years, they passed no such legislation. It never even came up in committee. When the Democrats took power, we passed a subprime bill. The provision he is talking about was the section of the subprime bill that was passed over the objection of a majority of the Republicans.

My guess is that the gentleman from Texas probably voted against the bill he has just hailed. We can check the Record.

But, yes, there was an amendment offered by the gentleman from Alabama that we worked on. It became a part of the Democratic bill that was passed over the objections of a majority of Republicans, and the gentleman from Alabama was severely criticized by most Republicans for voting for the bill.

During the period of Republican rule, nothing happened. When the Democrats took over, we did pass a subprime bill of which the SAFE Act was a part. It was opposed in final passage by a majority of the Republicans. The author, Mr. Bachus, was criticized by many Republicans for supporting the bill. And I would be interested in knowing whether the gentleman from Texas voted for the bill which he has just hailed.

Mr. Speaker, the record is relevant because when you----

Announcement by the Speaker Pro Tempore

Mr. Speaker, as I was saying, the notion that the differences between the parties is irrelevant, I understand why, given the Republican's record, they want to argue this.

The fact is, yes, the gentleman from Alabama had a good idea. He was chairman of the subcommittee during the 12-year period and could have brought it to the floor. But because of the Republican position that no regulation was appropriate, he couldn't do that. The gentleman from Texas said this was a very good idea. I agreed; that's why I supported it.

By the way, the gentleman from Texas voted against the bill, along with two-thirds of the Republicans that embodied it. So we wouldn't have had it if he had carried his way.

But the fact is that for 12 years after the subprime crisis broke, the Republican Party wouldn't allow the gentleman from Alabama, who was then chairman of the subcommittee, to bring his bill up. We did bring the bill up, yes, in a bipartisan way. Unfortunately, the gentleman from Alabama was then criticized by Members of his party on the conservative side and has been forced to withdraw it a little bit.

Differences between the parties are relevant. For 12 years, the Republicans wouldn't allow the gentleman from Alabama to bring his bill to the floor. In our first year, we did and I was glad to work with him, but it was a minority position opposed by the great majority of the Republicans, including the gentleman from Texas.

Mr. Chairman, I rise to claim time in opposition to the amendment.

Mr. Chairman, I yield myself such time as I may consume.

There are some provisions in this amendment that I support and there are some that I don't.

One of the parts of it that I do support is the amendment does call for a GAO study to analyze the effectiveness of the risk-retention provisions of this bill and make recommendations to Congress. My only regret is I wish we could have done a study before we implement this particular piece of legislation.

As you know, section 213 of the bill requires creditors to retain an economic interest in at least 5 percent of the credit risk of each loan that is not a qualified mortgage that the creditor transfers, sells, or conveys to a third party.

I think a lot of people feel that this skin in the game may be a good provision. I think the question that arises is what will be the impact on small lenders and small community banks across the country? One of the things that we want to make sure is that the bill is not really clear about the mechanism or the mechanics of how this provision would be implemented, and we're going to have to have regulatory clarification on that. I wish that, again, we could have had a study in advance of that so that we could then make sure that, as we are implementing this bill, that the regulators have some direction of how to go to make sure we implement this provision without causing major disruption in the mortgage process. Again, I wish we could have done that before.

There are concerns that I have about the manager's amendment as well, Mr. Chairman. First of all, rather than clarifying provisions related to broker compensation, yield-spread premiums, and ensuring all types of mortgage creditors are covered by equal antisteering provisions, this amendment adds further inequity and confusion.

Congressman Miller offered an amendment during the Financial Services Committee markup that would have preserved the careful balance of banning steering while preserving a consumer's ability to finance the closing costs and origination fees associated with their loan.

In committee, Chairman Frank said he felt that he and Mr. Miller had agreed in principle about only banning incentivized compensation and not direct compensation. Mr. Miller withdrew his amendment, given the agreement by the chairman to work with him on details of the language. The manager's amendment does not reflect that agreement, and the Rules Committee did not make in order an amendment submitted by Mr. Miller. Really instead of clarifying the ability of consumers to finance closing costs and origination fees through rate or principal, the manager's amendment removes that option to finance through the rate completely.

Additionally, the manager's amendment says all origination fees must be collected either up front or all fees shall be in the rate. This means consumers, again, will no longer have the option of paying some closing costs up front and some through the rate.

Consumers should be able to finance closing costs and origination fees as they deem appropriate for their individual circumstances. Clarifications were expected to ensure the preservation of this option, but the only clarification made was that the bill will now only prohibit this option in the manager's amendment.

What does that mean? Well, that means when an individual goes to their mortgage lender or to their local community bank, in the past they have had an option to say, you know, I would need to put a certain amount of my closing costs in the loan and maybe that would be reflected in the rate. Maybe part of it would be reflected in the principal balance. But now we're going to take away the option for the banker to offer that to the individuals. And I think that's what our opposition has been to this bill from the very beginning, that while we are trying to prevent predatory lending, and everybody is against predatory lending, at the same time we've started down a road where we are going to limit the available products to individuals. We're going to raise the cost of these mortgages to individuals, and, more importantly, we're going to cause mass confusion in the marketplace.

There are some very punitive things in this bill that if someone is ``steering,'' that could result in a lawsuit. And steering could be, well, I think this mortgage, if I offered you this one, it would be beneficial to you but I also think if I offered you this mortgage. But I think it's going to deter a lot of mortgage bankers and community bankers from offering two different options to individuals because they're going to be afraid that somehow they are steering.

I have some other concerns which I will express further into the debate here.

At this time, Mr. Chairman, I reserve the balance of my time.

Mr. Chairman, I appreciate the chairman's sensitivity to this because I think it is a very important issue that we need to resolve in this legislation before it becomes law.

I yield to the gentleman.

Thank you.

Mr. Chairman, at this time it's my privilege to yield 2 minutes to the gentlewoman from West Virginia (Mrs. Capito).

I want to speak to the gentlewoman's provision in this bill, and one of the concerns I have, I mean, there is a lot of people that want to debate States' rights versus Federal rights. One of the concerns I have about the provision in the manager's amendment is that it says yes. It says, yes, there is Federal jurisdiction and, yes, there is State jurisdiction.

What I am concerned about is that could cause some potential conflicts, and that States would think they had jurisdiction, the Federal Government would think they have jurisdiction, and that States might get the opinion that they might have jurisdiction on some of the other provisions in this bill.

And so one of the things that I think we need to make sure of, as we move forward on this legislation, is we have, maybe, clearer lines on this preemption statute to make sure that everybody understands what the rules of engagement are, as this particular piece of legislation is being implemented.

So one of the other pieces of opposition that we have to this is that we need a clear, I think a clearer preemption wording in this bill to make sure that we understand what the States' jurisdiction is over this bill and what the Federal jurisdiction is over this bill.

I reserve the balance of my time.

Mr. Chairman, another provision in this that has caused concern is the tenant provisions.

This amendment would require property owners to promptly notify any tenants or potential tenants upon becoming subject to foreclosure or defaulting on their mortgage loan. This language requires the owner to provide information on the circumstances with respect to the property and the effect of the default or foreclosure.

Notice to tenants is important. However, in multifamily projects such as apartments, a receiver is typically put in place to manage the property so that residents can remain in their apartments with no disruption. Mandating a notice to residents, if not done correctly, could cause alarm and maybe not even needed alarm.

I have a letter from the National Apartment Association where they have concerns about this very issue, that if you have got an apartment complex, the owner may be temporarily in default. You give notice to the tenants that you are temporarily in default. The tenants get scared, they start looking for other places to live, and, basically, creating vacancies, and, in fact, maybe making the default permanent by the fact that there will not be sufficient revenues to make the payments. So I have very large concerns about that.

Additionally, the amendment allows HUD to step in to troubled properties, transfer a multiproperty project, if delinquent, at the risk of fault or disinvestment or foreclosure.

This is a fairly major expansion of HUD's authority and could be considered to be a property taking. Property of this type may not be in foreclosure as yet, yet the provision would force properties into foreclosure or over into government control, again, a major expansion, quite honestly, a move away from what the original intent of this legislation was.

The original intent of this legislation was to prevent predatory lending. And now we are prescribing how tenants are going to be treated, whether we are going to force property owners to make disclosures about their financial condition, a major diversion from what I think is the intent of this legislation, and, again, one of the reasons that I do not support this amendment.

Mr. Chairman, I reserve the balance of my time.

Mr. Chairman, I, again, rise in opposition to this amendment. One of the purposes of this legislation, again, we said, was to prevent predatory lending. But, unfortunately, the consequences of this legislation are going to be to increase the cost of mortgage financing for consumers.

It's going to raise the monthly payments for many consumers over what their choices would have originally been. It's going to limit the choices that are available to them. It's going to force lenders to provide maybe only one choice. It's also, I think, going to continue to cause a major disruption in the mortgage system.

As one of the speakers originally said, the market is very fragile right now, and some of the provisions in this amendment, I think, contribute to that.

With that, I encourage Members to vote against this.

I yield back the balance of my time.

Mr. Chairman, and Members of the body, this discussion is a discussion that has been going on for 5 or 6 years. In fact, it predates that.

In 1999, this body discussed the fact that Freddie and Fannie were being pushed into making loans without a down payment. And the New York Times, in an article in September, 1999, actually quoted Peter Wallison as saying that you are not requiring a down payment, and now the Clinton administration is pushing Freddie and Fannie to lower the credit standards. And he makes the statement in there that, if they fail, the government will have to step in and bail them out the way it stepped up and bailed out the thrift industry. In 2005, I made another statement that some people considered wild-eyed, and I said that if we don't reform the subprime lending market, we are going to have a similar situation that we faced with subprime lending.

Mr. Kanjorski, listening to him reminded me that he and I pretty much, I thought, put together a bill--or he said bipartisan legislation, what he was talking about is, we were drafting it, and Chairman Frank was working on it. And I actually made the statement in 2005, and I will read my statement: ``Uniform standards in the marketplace are essential if the primary and secondary markets are to continue to serve as a vital source of liquidity to make mortgages available to homebuyers with less than perfect credit. I am committed to finding ways to end predatory lending while also preserving and promoting access for all homeowners to affordable credit.'' That was in May of 2005.

Chairman Frank said--and I think said accurately--earlier on the floor that he and I came awfully close to a consensus in 2005 for a bill. I don't, quite frankly, know what happened. I am reading a Charlotte Observer statement, and I know Mr. Miller was concerned about putting some things in the bill that even some Democrat legislators objected to and I felt would limit access to credit. It is striking that I look at this House bill, 1728, and I will say this, Mr. Miller and Mr. Watt, this is essentially what you were advocating back in 2005. But at that time, I thought there was a bipartisan feeling--that I actually submitted in draft form--that didn't contain some of these things. Because I really sincerely believe that you will eliminate many worthy borrowers with this legislation because it is almost a one-size- fits-all.

There's going to be a lot of loans that could be made and people could buy a home, and that's a delicate balance. That's a balance we obviously violated throughout the 1990s by putting people in homes that shouldn't be there. And

Mr. Miller, I think, and Mr. Watt have argued that if they have to pay a certain price, it just won't work, and many of my Republican colleagues agree to that. And as I said, I submitted draft legislation for consideration, but we couldn't get there.

If you will recall, the other body said they were not going to take a provision on securitization. They weren't going to take it. And here we are today, 4 years later, and we all agree that there needs to be skin in the game, but this legislation before us is not the legislation that Mr. Kanjorski has talked about that I was ready to move in 2005 or 2006, that Mr. Frank talked about, and it was essentially the legislation of Mr. Watt. I believe it was wrong then; I believe it's wrong now.

Let me tell you what I believe, and I believe Mr. Watt and Mr. Miller are sincere. According to the Charlotte Observer, we were close to an agreement. I have no idea what happened.

But let's talk about today. Let's talk about today, and let's assume and I assume, and I think I'm right, that we have all been very concerned about this. The legislation today, I think all the testimony in the hearings has been that poor origination standards plagued the mortgage industry and we need origination reform. We did something last year. We started proposing in 2005 registration of all brokers.

To register all mortgage originators, and that has been a tremendous success. We have got a lot of people committing fraud in starting those loans, and I think we are putting an end to that through legislation.

We need to work on something else, and I think we all agree. I have an amendment that I'm going to the Rules Committee to propose, and I think there are some Democratic amendments. There are now people coming in and promising people they'll work out these foreclosures, and they are defrauding people who are actually going through a foreclosure, which is outrageous; and this bill needs a strong provision on that.

But here's what it doesn't do: Chairman Frank and I supported in the last Congress H.R. 3915. Look at that bill and look at this bill. That included licensing and registration of originators as the first title. That's what I had proposed. The Senator from California proposed a similar thing and introduced it in the Senate. I introduced it in the House. That's now passed. It was approved by a large bipartisan majority.

But H.R. 1728, the bill before us, it strikes a far different balance, and I believe it's one that will undermine the mortgage market at the worst possible time. We are just starting to see preliminary signs of a possible housing recovery. Look at the numbers. Loans are being made. But H.R. 1728, the bill before us, it lacks clarity needed to provide, I think, meaningful protection to consumers. That was the testimony in the hearings from a coalition of consumer advocacy groups and labor groups. It manages to punish both responsible industry participants and worthy borrowers at the same time.

I am going to go fairly quickly, Mr. Chairman.

Rather than focusing on basic underwriting standards we were doing in 2005 and 2006 and in Chairman Frank's bill last year, we are not doing that anymore. Now, part of that is the Federal Reserve has adopted comprehensive antipredatory lending regulations. Mr. Garrett mentioned that. And those are going forward, and it's almost like this bill doesn't realize what has happened over the last year or two. It will expose the mortgage financial industry to substantial litigation risk. There was plenty of testimony on that. The cost of these inevitable lawsuits are going to be passed on to consumers.

I actually proposed in my draft an individual right of action if people violated the standards that we were close to agreeing to. Many lenders have said they'll stop offering certain mortgage products that people are taking now. They're successful in paying them back.

Consumer advocates, Federal regulators, Members on both sides of the aisle expressed reservation on the bill before us. Margot Saunders, and I'm going to quote here again, National Consumer Law Center, we worked with her, the gentleman from North Carolina and I, on trying to fashion a bill. She was for the bill last year. She says that this bill is ``convoluted and virtually impossible as a mechanism to solve the current problem.'' Now, she was testifying on behalf of a coalition of consumer advocacy groups.

The administration is working out a plan right now to resolve troubled mortgages, and we shouldn't make it more difficult for worthy borrowers to get home loans while they're doing that. A ``yes'' vote will do exactly that. It will raise the cost of mortgage credit, limit the availability to millions of Americans. It won't give the certainty that our mortgage market needs. It's poorly crafted and ill defined.

Madam Speaker, by direction of the Committee on Rules, I call up House Resolution 400 and ask for its immediate consideration.

Madam Speaker, for the purpose of debate only, I yield the customary 30 minutes to the gentleman from Texas (Mr. Sessions). All time yielded during consideration of the rule is for debate only.

I yield myself such time as I may consume.

General Leave

Madam Speaker, I ask unanimous consent that all Members be given 5 legislative days in which to revise and extend their remarks on House Resolution 400.

Madam Speaker, House Resolution 400 provides for initial consideration of H.R. 1728, the Mortgage Reform and Anti- Predatory Lending Act. The rule provides for 1 hour of general debate to be controlled by the Chair and ranking member of the Committee on Financial Services. After the general debate, there will be no further consideration of the bill except pursuant to the subsequent rule.

Homeownership has always been a key part of the American Dream. Unfortunately, for hundreds of thousands of Americans, that dream has been shattered by predatory lenders that entice them to accept loans they could not afford.

Now, across this country, hardworking families are unable to pay loans they can't afford, and they are losing their homes to foreclosure in unprecedented numbers. On top of this, many would argue that the extreme problems in the mortgage industry have been one of the most serious causes of our current, economic problems.

This week we have the opportunity to rein in these lending practices. H.R. 1728, the Mortgage Reform and Anti-Predatory Lending Act of 2009 is a major step forward in curbing abusive and predatory lending. This Congress has already passed legislation aimed at invigorating the housing market, by helping new homebuyers purchase homes and dispensing of many of the toxic assets that have had our economy in a stranglehold.

The bill we take up today is the second and equally important step of building a stronger foundation. The regulations that are proposed will put a new face on the mortgage system that has become rife with fraud.

H.R. 1728 would outlaw many of the worst industry practices, while also preventing borrowers from deliberately misrepresenting their income to qualify for a loan. The message is simple: Lenders can't give loans to people who can't afford them and borrowers have to tell the truth about their finances when applying for a loan. If you can't play by the rules, you will be held accountable.

This bill draws upon everything that was once fundamentally sound about our banking system. It takes us back to a time when community bankers knew their consumers, to when they understood clearly what they could afford and to when they worked with them to offer loans that worked best for their families.

This is a far cry from some of the practices developed during the real estate boom, when mortgages became far more risky and terms like ``no-doc

lending'' and ``liars loans'' became part of our language.

Madam Speaker, this bill sets minimum standards for mortgages requiring that consumers must have a reasonable ability to pay the loan back, and that mortgage refinancing must provide a net tangible benefit to the consumer.

All mortgage originators will be licensed and registered. Securitizers and other participants in the secondary mortgage market, for the first time, under Federal law, will be liable for supporting irresponsible lending.

The bill also prohibits financial incentives that encourage mortgage originators to steer consumers to higher cost and more abusive mortgages. In other words, lenders can't sell consumers loans that aren't good for them.

Over the last decade, many subprime loans were made to borrowers who, due to their weak credit histories, were high credit risks. This bill will make sure that, instead of rewarding originators for pumping out high volumes of costly mortgage loans, there will be incentives for lenders to give borrowers the best possible price and stick with the borrower over the course of the loan.

And any creditor that violates the standard set forth in this bill will be liable to the consumer. They will be required to either rescind the loan and pay for all the legal fees or work with them in a timely fashion to modify or refinance the loan at no additional cost to the borrower.

Somewhere along the line, our mortgage system has lost its way at a great cost to our economy. The affordable, 30-year fixed rate mortgage that allowed generations to experience the American Dream of homeownership has been tragically replaced with a subprime loan, teaser rates, and unaffordable payments.

Commonsense principles, like having the ability to pay, were abandoned in favor of schemes that involved collateralized debt obligation and credit default swaps. And as this financial house of cards collapsed, it is now the American taxpayers that are left holding the bag.

Madam Speaker, I hope we have learned our lesson. It is time to bring responsibility and accountability back to mortgage lending and to make sure we don't face another crisis like this. This bill is essential if we are to stabilize the housing market, to end these abusive practices, and to get our economy back on track.

I commend my colleagues, Mr. Miller, Mr. Watt, and Chairman Frank for their determination to this critical issue and their hard work in bringing it to the floor today.

I reserve the balance of my time.

Madam Speaker, I yield 3 minutes to the gentleman from Massachusetts, the Chair of the Committee on Financial Services, Mr. Frank.

I yield the gentleman 2 additional minutes.

Madam Speaker, I yield 1 minute to the gentleman from Massachusetts (Mr. Frank).

I yield an additional minute to the gentleman from Massachusetts (Mr. Frank).

Mr. Speaker, I yield 1 minute to the gentleman from Massachusetts (Mr. Frank).

I yield the gentleman an additional 30 seconds.

Mr. Speaker, I yield 1 minute to the gentleman from Massachusetts (Mr. Frank), the chairman of the Committee on Financial Services.

I yield 15 seconds to the gentleman.

First, I once again want to thank Mr. Miller and Mr. Wamp, my colleagues, for their excellent work on this bill, and to Chairman Frank for his work as well and for being here on the floor with us today for some very lively and important debate that clearly emphasized the importance of this bill, how long we have waited for this reform, and the damage that has been done by not having this reform for this considerable length of time.

By ensuring borrowers only secure loans that they can afford, this legislation will give Americans the best opportunity to purchase and maintain a home.

This legislation is about accountability. It will reward people who play by the rules and guarantee hard consequences for those individuals and institutions that do not. It's good for borrowers, it's good for lenders, and it is very good for our economy as a whole.

I urge a ``yes'' vote on the previous question, and on the rule.

I yield back the balance of my time, and move the previous question on the resolution.

The previous question was ordered.