House passes Wall Street reform revisions

The House passed legislation on Tuesday to modify regulations for home mortgages established in the 2010 Dodd-Frank Wall Street overhaul.

The first measure, passed 263-162, would alter the definition of “high cost” mortgages for mobile homes, also known as manufactured housing.

The bill would allow the first mortgage on a principal home to be exempted from a “high cost” classification if the annual percentage rate (APR) isn’t more than ten percent of the average prime offer rate; if the transaction doesn’t total more than $75,000; and if the mortgage points and fees paid aren’t more than $3,000.

{mosads}Rep. Steven Fincher (R-Tenn.), the bill’s sponsor, argued that current mortgage regulations from the Consumer Financial Protection Bureau made it difficult for low-income Americans to obtain mortgages for mobile homes.

“Manufactured housing serves as a critical option for those who could not otherwise afford to buy a home,” Fincher said. “This important source of home ownership for American families is being threatened by current mortgage rules that are too inflexible and lead to the denial of financing certain homes.”

Rep. Maxine Waters (D-Calif.), the top Democrat on the House Financial Services Committee, previously supported a version of the bill in the last session of Congress. But she maintained Tuesday that “investigative reporting” from the CFPB since then indicated that consumers would be exposed to excessive risk.

“If enacted, H.R. 650 would allow abusive lenders to charge up to nearly 14 percent interest before consumer protections are triggered, more than four times the average borrower is paying on a home loan,” Waters said. “There’s not one member of Congress who would pay or is paying 14 percent, 12, 13, 11 percent interest. This is outrageous.”

The White House issued a veto threat against the bill, arguing it would allow lenders to raise the cost of loans even if consumers cannot afford to repay them.

But other Democrats said the measure would help more people qualify for loans on mobile homes.

“Without this bill, working families and retirees with poor credit or limited income can’t obtain credit at all or are forced into expensive housing options,” said Rep. Terri Sewell (D-Ala.), one of the bill’s four Democratic co-sponsors.

Another bill, passed 286-140, would exclude the cost of title insurance from points and fees on loans. It would also establish that funds held in escrow for property insurance payments aren’t considered points and fees.

The White House also threatened to veto the bill over concerns that homeowners would increase fees related to mortgages. Under current law, up-front costs known as points and fees cannot exceed three percent of the loan’s cost.

Democrats argued that the measure would allow lenders to charge excessive fees.

“Buying a home is complex, and consumers should not have to be worried that their service providers are colluding to scam borrowers. Instead they should be competing to provide them the best prices,” Waters said.

The House passed a similar bill by voice vote last year, but the Senate never considered it.

Waters signed a letter with 11 other Democrats in August 2014 urging Sen. Harry Reid (D-Nev.), then the Senate majority leader, to clear the measure.

“We urge you and the entire Senate to quickly adopt the Mortgage Choice Act to improve access to credit, enhance competition among title insurance providers, and reinforce the CFPB’s authority to define what title insurance costs qualify as excludable ‘points and fees,'” the Democrats wrote.

House Financial Services Committee Chairman Jeb Hensarling (R-Texas) accused Democrats of reversing their original position.

“Regrettably, there are some people within this body who believe in bipartisanship more in theory than they do in practice,” Hensarling said. “I regret those who supported a bill before they were against it, but that’s where are today.”