S. 1299 would establish on behalf of consumers a fiduciary duty and other standards of care for mortgage brokers and originators, and it would establish standards to assess a consumer's ability to repay.
Detailed Summary
Borrower's Protection Act of 2007 - Amends the Truth in Lending Act to deem a mortgage broker, in the case of a home mortgage loan, to have a fiduciary relationship with the consumer. Subjects each such mortgage broker to all federal and state requirements for fiduciaries.
Requires each mortgage originator, in addition to the duties imposed by federal and state requirements, to act with respect to each home mortgage loan: (1) with reasonable skill, care, and diligence; and (2) in good faith and with fair dealing in any transaction, practice, or with associated course of business.
Requires a mortgage originator, before entering into or otherwise facilitating a home mortgage loan, to verify the borrower's reasonable ability to pay the principal and interest, real estate taxes, and homeowners insurance fees and premiums. Prescribes a formula for determining ability to pay variable mortgage rates.
Makes the lender liable for acts, omissions, and representations of a mortgage broker in connection with any rate spread mortgage loan the broker sells or delivers to the lender.
Prohibits a mortgage originator from steering a consumer to home mortgage loan rates, charges, principal amount, or prepayment terms not reasonably advantageous to the consumer.
Prescribes mortgage originator duties to consumers.
Prohibits specified mortgage originator conduct, especially entering into a home mortgage loan when the originator has reason to believe that the appraiser of the property securing the loan failed to act in good faith and fair dealing in its appraisal.
Prohibits a mortgage originator from: (1) seeking to influence an appraiser or otherwise to encourage a targeted value; or (2) selecting an appraiser on the expectation that the appraiser would provide a targeted value.
Requires the mortgage originator to provide a copy of the appraisal report to a home mortgage loan applicant, whether credit is granted, denied, or the application was withdrawn.
Status of the Legislation
Latest Major Action: 5/3/2007: Referred to Senate committee. Status: Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
Points in Favor
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Points Against
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Visitor Comments
Gregory Hartley
Nice. Vanilla flavored and very thin so it goes down easy. Once again, lenders get off with practically nothing while appraisers get the stink-eye. This little bill mentions brokers but not banks. It mentions good faith, fair dealing, blah, blah, blah. It even mentions them old evil appraisers. What it doesn't mention is lender licensing, lender signed certification, state regulatory bodies similar to appraisal boards that would regulate these crooks, fee only mortgage originations, and other unpopular items of interest. Once again, Congress has posted a "Do Not Enter" sign on the candy store but has failed to put a lock on the door. Except on the appraiser entrance. Oh, I forgot to mention, I'm an appraiser. I've seen the damage done by the brokers and bankers. And yes, appraisers. Still, appraisers are regulated, lenders are not. Let's level the playing field people.