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H.R. 3081, The Fairness for Homeowners Act of 2007
- This item is from the 110th Congress (2007-2008) and is no longer current. Comments, voting, and wiki editing have been disabled, and the cost/savings estimate has been frozen.
Version saved on September 11, 2007, 18:22:10, by webmaster:
H.R. 3081 would amend the Truth in Lending Act to protect consumers from certain practices in connection with the origination of consumer credit transactions secured by the consumer's principal dwelling.
Detailed Summary
Fairness for Homeowners Act of 2007 - Amends the Truth in Lending Act to prohibit any creditor or mortgage broker from making, providing, or arranging for any consumer credit transaction secured by a consumer's principal dwelling without verifying the consumer's reasonable ability to make the scheduled payments of principal, interest (including variable interest), real estate taxes, homeowner's insurance, assessments, and mortgage insurance premiums.
Prescribes criteria for determining the reasonable ability to make such payments.
Prohibits steering (arranging for a lower investment grade credit transaction if the consumer qualifies for a higher investment grade transaction) and prepayment penalties for adjustable rate mortgages (ARMs) that are not jumbo mortgages.
Limits financed points, finance charges, and fees to 5% of a transaction's principal, unless the transaction is ensured or guaranteed by the Secretary of Housing and Urban Development, the Secretary of Veterans Affairs, or the Farmers Home Administration.
Specifies duties of agency for mortgage brokers acting to obtain or arrange for any consumer credit transaction secured by the consumer's principal dwelling.
Requires creditors and mortgage brokers to obtain independent verification that a borrower seeking to refinance a special mortgage has received counseling on the transaction's advisability. Defines "special mortgage" as one that: (1) was originated, subsidized, funded, or guaranteed by or through a state, tribal, or local government, or nonprofit organization; and (2) bears one or more specified nonstandard payment terms which substantially benefit the consumer.
Prescribes minimum financial requirements for mortgage brokers.
Excludes reverse mortgages from coverage by this Act.
Status of the Legislation
Latest Major Action: 7/18/2007: Referred to House committee. Status: Referred to the House Committee on Financial Services.
Points in Favor
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Points Against
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Visitor Comments
Terry Liebman
July 26, 2007, 8:22pm (report abuse)If this bill is passed, it could have a devastating affect on all homeowners. Clearly, abuses have occurred. Homeowners have been taken advantage. But this bill throws the baby out with the bathwater. It goes too far.
This bill completely eliminates “stated income” loans. Current and possible future “self-employed” homeowners – who generate strong cash flow but show limited income – will probably be unable to refinance or buy a home.
Qualifying all variable rate loans – including variable loans with fixed rate periods of 5 years or longer – at the fully indexed rate PLUS 200 basis points will probably make these loans unavailable for most borrowers.