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WALZ VOTES FOR COMMON SENSE FINANCIAL REFORMS
Two bills to curb irresponsible lending and investigate questionable lending practices pass House
For Immediate Release
May 7, 2009
Contact: Meredith Salsbery
507-388-2149
WASHINGTON D.C. — In an effort to begin much-needed reforms of the lending industry, Congressman Walz stood with his colleagues in the House to pass two critical pieces of legislation this week.
“We know the root of our economic recession is questionable lending practices that gave loans to consumers who shouldn’t have had them, took risks that investors didn’t understand and intentionally skirted poorly enforced regulations,” said Walz, “Those practices are not acceptable and the legislation we passed today marks the beginning of the end for these types of risky financial transactions. The legislation also provides law enforcement critical tools to protect the public from attempts to defraud it in the midst of this economic and financial crisis.”
The Mortgage Reform and Anti-Predatory Lending Act of 2009 (H.R.1728) will curb irresponsible home mortgage loans. The legislation will outlaw many of the egregious industry practices that marked the subprime lending boom, and it will prevent borrowers from deliberately misstating their income to qualify for a loan.
Specifically, the bill would:
- ensure that mortgage lenders make loans that benefit the consumer and prohibit them from steering borrowers into higher cost loans;
- establish a simple standard for all home loans: institutions must ensure that borrowers can repay the loans they are sold;
- for mortgage refinancing, require that all loans provide a net tangible benefit to the consumer;
- for the first time ever, make the secondary mortgage market responsible for complying with these standards when they buy loans and turn them into securities;
encourage the market to move back toward making fixed-rate, fully documented loans;
- Protect tenants who rent homes that go into foreclosure.
The Fraud Enforcement and Recovery Act of 2009 (S.386), which incorporates provisions from H.R. 1748 that Congressman Walz co-sponsored, provides critical funding and updated tools to help law enforcement pursue and prosecute the mortgage and corporate fraud that impacted millions of Americans and led to the worst financial crisis in decades. It also expands federal fraud laws to cover money disbursed from last year’s Wall Street bailout legislation and this year’s Recovery Act and expands those laws to include those mortgage lenders that are not regulated or insured by the federal government.
“This legislation gives needed resources to law enforcement to investigate and prosecute financial fraud. It also makes sure that both the TARP and the Recovery Act are covered by federal fraud laws. I have said all along that taxpayers need to be protected above all, and this legislation gives the public a crucial tool for preventing fraud. With this bill, we send a message to anyone who tries to rob the public in the midst of this terrible economic and financial crisis: you will be punished,” concluded Walz.
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