WASHINGTON – Congresswoman Shelley Moore Capito (R-WV) today expressed strong support for legislation that will comprehensively address the issue of predatory lending and the troubling rate of foreclosures.

“Congressional leaders of both parties have come together to address a crisis that is affecting West Virginians and homeowners across the country,” said Capito.  “Recent years have seen abusive lending practices result in a drastic increase in home foreclosures.  This legislation takes a balanced – but bold – step to prevent such abuses from happening in the future.”

Rep. Capito, the Ranking Member of the Subcommittee on Housing and Community Opportunity, was part of a core group of lawmakers that negotiated a bipartisan compromise in the House Financial Services Committee to bring the Mortgage Reform and Anti-Predatory Lending Act to a vote before the full House.  

The bill would implement a vast array of reforms to protect consumers and promote a more fair and transparent mortgage process.  The creation of a national registry of loan originators will set state licensing guidelines to hold lenders accountable and ensure that borrowers are not placed in loans they cannot afford.  The bill also places a strong emphasis on mortgage counseling and would mandate a one page cover sheet for new loans that clearly outlines the terms and potential costs associated with the mortgage.

Capito stressed the importance of mortgage counseling and clarity for consumers in an address to the House.

“The purchase of a home is the most important – and arguably the most complicated – financial decision in a consumer’s life.  The amount of paperwork and technical language involved can often be incredibly intimidating… The availability of counseling can make this process much easier.”

An amendment to the bill includes additional protections for consumers by mandating escrow accounts for certain types of mortgages so consumers can responsibly budget for taxes and homeowners insurance.  The amendment, offered by Rep. Paul Kanjorski (D-PA), Rep. Judy Biggert (R-IL) and Rep. Capito would also implement strong Federal appraisal standards to curb fraudulent appraisals that harm homeowners and jeopardize investment.

“The current mortgage system does not effectively protect borrowers from the many abuses that can occur in our complex mortgage system,” stated Rep. Kanjorski.  “For most people, buying a home is the largest and most complex transaction they will ever undertake.  This legislation will help make sure homebuyers are paying a fair price for their homes at a cost they can afford.”

During debate today Capito urged her colleagues to support the bill and analyze it in its entirety.

“On the whole, the components of this legislation will provide consumers with the necessary tools and protections to avoid another housing crisis like the one we are experiencing today,” she said. 

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