The Mortgage Reform and Anti-Predatory Lending Act of 2007
The Mortgage Reform and Anti-Predatory Lending Act of 2007
Sec. 101. Definitions.
Establishes definitions for various terms, including: “mortgage originator,” “qualified nationwide registration regime,” “qualifying state licensing law,” “residential mortgage loan,” and “securitizer.”
Sec. 102. Residential mortgage loan origination.
Provides that all mortgage originators (including mortgage brokers and depository institutions that originate mortgages) will be subject to a federal duty of care that requires (1) licensing and registration under State or Federal law, (2) diligently working to present consumers with a range of residential mortgage loan products appropriate to the consumer’s existing circumstances, (3) making full, complete, and timely disclosures to consumers, (4) certifying to creditors compliance with mortgage origination requirements under this section, and (5) including in all loan documents the unique identifier of the mortgage originator provided by the qualified nationwide registration regime. This subsection expressly does not create an agent or fiduciary relationship, but mortgage originators are free to become an agent or a fiduciary if they so desire. HUD, OCC, OTS, and FDIC, in consultation with FTC, will jointly prescribe regulations to further define the federal duty of care.
Sec. 103. Anti-steering.
Provides that no mortgage originator can receive, and no person can pay, any incentive compensation (including yield spread premiums) that is based on or varies with the terms of a mortgage loan. HUD, OCC OTS, and FDIC, in consultation with FTC, will jointly prescribe regulations to prohibit mortgage originators from steering any consumer to a mortgage loan that is not in the consumer’s interest (such as a loan with predatory characteristics), and will seek to ensure that such regulations meet the conditions set forth in the legislation. However, nothing in this subsection should be construed as limiting the ability of a mortgage originator to sell residential mortgage loans to subsequent purchasers, or restricting a consumer’s ability to finance origination fees if they were disclosed to the consumer and do not vary with the consumer’s decision to finance such fees.
Sec. 104. Licensing and registration of mortgage originators.
Requires all mortgage originators to be licensed and registered pursuant to qualifying State licensing law or an equivalent Federal banking regime. If States do not pass qualifying laws that meet the standards set forth in the bill, then HUD will promulgate regulations requiring mortgage brokers in such States to act “solely in the best interest” of the consumer. States will have two years from the date of enactment of this Act to pass qualifying State licensing laws, and HUD will have the authority to extend this deadline by six months for individual States acting in good faith.
The Mortgage Reform and Anti-Predatory Lending Act of 2007
Filed under: Legal, Mortgage Contract
Leave a Reply