This afternoon, an amendment protecting mortgage consumers from predatory lending practices made it into Sen. Chris Dodd’s (D-Conn.) financial regulatory reform bill. The Senate approved the amendment by Sen. Jeff Merkley (D-Ore.) and Sen. Amy Klobuchar (D-Minn.) 63 to 36.
The new language prohibits mortgage lenders from receiving hidden payments when they sell high-cost loans and prohibits companies from giving loan officers higher pay for selling riskier or higher-fee loans. It also bolsters underwriting standards, making sure that homeowners can really afford their mortgages and precluding lenders from offering “liar loans” and “no-doc” loans.
“Deceptive mortgage practices like hidden steering payments directly led to the Wall Street meltdown and resulted in millions of families losing their homes,” Merkley said in a statement. “We took a huge stride forward today in the fight to restore fairness for homeowners and strengthen the financial foundations of our families.”