Bill protects homeowners from deceptive lending practicesAn amendment put forth by Senator Amy Klobuchar (D-MN) and Senator Jeff Merkley (D-OR) to the Wall Street reform bill passed the Senate by a vote of 63-36 Wednesday.
By: Staff Report, Alexandria Echo Press
An amendment put forth by Senator Amy Klobuchar (D-MN) and Senator Jeff Merkley (D-OR) to the Wall Street reform bill passed the Senate by a vote of 63-36 Wednesday.
The amendment is designed to protect homeowners by prohibiting mortgage lenders and loan originators from receiving hidden payments when they steer homeowners into high-cost loans and will create strong underwriting standards to ensure borrowers have the ability to repay their loans.
“Complex and deceitful lending practices were at the heart of the financial crisis,” said Klobuchar. “As we work to reform Wall Street, we must establish safeguards to protect consumers from predatory loan practices. Helping everyday Americans obtain sound loans while avoiding unnecessary risk is essential to restoring our economy.”
“Deceptive mortgage practices like hidden steering payments directly led to the Wall Street meltdown and resulted in millions of families losing their homes,” said Merkley. “We took a huge stride forward today in the fight to restore fairness for homeowners and strengthen the financial foundations of our families. I look forward to seeing this amendment become law so that never again will hidden steering payments put millions of homeowners on the fast track to foreclosure.”
Senators Klobuchar and Merkley’s amendment will ban mortgage lenders and loan originators from accepting payments based on the interest rate or other terms of the loans. In addition, it will require lenders to document income and other underwriting standards to ensure that borrowers’ can repay their loans. This will end the damaging and deceptive practice of “no doc” and “liar loans.”
Minnesota enacted a law in 2007 that ensures that lenders obtain essential financial information from borrowers and provide responsible advice when providing a loan.