Mortgage Reform Bill Offered by Congressman Frank Would Provide Cities Some Relief

 Cities being hit hard by foreclosures and predatory lending would see some relief from a bill introduced today by House Finance Chairman Barney Frank (D-Mass.), according to the National League of Cities (NLC). The bill, "The Mortgage Reform and Anti-Predatory Lending Act of 2007", would increase consumer protections and prohibit predatory lending practices through a variety of new requirements.

"America`s cities need tools to reduce predatory lending practices that destabilize our neighborhoods and create a nightmare for families faced with losing their homes," said NLC President Bart Peterson, mayor of Indianapolis, Ind. "This legislation provides communities with these tools. It will strengthen America`s housing finance system while protecting the gains in homeownership we`ve made and bring confidence back to the homebuyer by ensuring that all mortgage brokers and lenders are licensed and held accountable for their actions."

Peterson noted that a recent NLC survey of municipal housing directors found that 52 percent identified predatory lending as a problem in their communities. A little more than half also found that foreclosures posed significant housing challenges for their communities.

"Developing an effective housing finance system is one of NLC`s top legislative priorities," said Peterson. "This legislation appears to go a long way toward correcting some of our most difficult problems without harming the underlying ability for people to buy homes in our communities."

The bill offers several key provisions to better protect consumers in the home buying process:

  -- Requires all mortgage lenders and brokers to determine at the outset
     if a homebuyer has a reasonable ability to repay the entire loan, or
     a refinance loan has a net tangible benefit to a homeowner.
  -- Helps regulators weed out predatory lenders by requiring all mortgage
     lenders and brokers to be licensed and registered at the state or
     federal level.
  -- Prohibits mortgage originators from steering consumers into mortgages
     with higher interest-rates than they could otherwise qualify.
  -- Requires mortgage creditors who discover that their loans violate
     minimum standards, such as the ability to repay the loan, to "cure"
     the loan within 90 days of discovery.

For information on NLC`s housing policy or to get a copy of the new NLC report on local housing conditions, contact Sherry Conway Appel, 202-626-3003 or Laura Sweeney, 202-626-3051.

The National League of Cities is the nation`s oldest and largest organization devoted to strengthening and promoting cities as centers of opportunity, leadership and governance. NLC is a resource and advocate for 19,000 cities, towns and villages, representing more than 218 million Americans.

Source: National League of Cities

CONTACT: Sherry Conway Appel, +1-202-626-3003 and Laura Sweeney,
+1-202-626-3051, both of National League of Cities