House OKs easing of lending rules

Mortgage requirements part of 2010 law aimed at banks

WASHINGTON -- The House on Tuesday overwhelmingly adopted legislation to ease some mortgage-lending requirements of a 2010 law reining in banks and Wall Street after the financial crisis.

The House first voted 263-162 on a bill to ease some curbs on lending for mobile and modular homes under the so-called Dodd-Frank law.

Lawmakers then voted 286-140 for a second measure that would ease restrictions aimed at making sure consumers can repay their loans -- but which bill sponsors say has had the effect of making it more difficult for some prospective borrowers to obtain credit.

The four representatives from Arkansas -- all Republicans -- voted in favor of both bills, which now go to the Senate.

The first vote fell short of the two-thirds that would be required to overcome a veto threat issued by President Barack Obama on Monday. The second measure garnered the two-thirds vote necessary to override a veto.

In threatening a veto, the White House had warned that the bills would permit borrowers to be "steered" into higher-cost loans.

Home mortgages were a flash point of the 2008 financial crisis. Ahead of the crisis, banks sold to investors bundles of risky, high-interest mortgages. Millions of home borrowers ended up defaulting on the loans when the interest rates spiked and the housing market bubble burst in 2007. The value of the mortgage securities held by banks and other investors plummeted.

Republican lawmakers pushing the legislation said it would provide relief from regulatory overreach for low- and moderate-income Americans.

"We have struggling constituents who want to own that first home, who want a break on their [mortgage] closing costs," Rep. Jeb Hensarling of Texas, chairman of the House Financial Services Committee, said Tuesday.

The committee's top Democrat, Rep. Maxine Waters of California, insisted that the legislation would roll back consumer protections "and leave many low-income and minority families exposed to the kinds of predatory practices that were commonly used in the run-up to the financial crisis."

One of the bills would exclude some expenses, such as set-asides for future insurance payments, from figuring into the total points and fees for a mortgage as spelled out to borrowers. There is a legal requirement that points and fees not exceed 3 percent of the total loan amount, in order for mortgage lenders to be deemed as having made a reasonable loan with strong chances of being repaid.

The other bill would ease some restrictions on mortgage lending for mobile and modular homes. In addition, the definition of high-cost mortgages for such homes would be narrowed.

Many borrowers buying mobile homes "are among the lowest income and economically vulnerable consumers," the White House said in its veto message. The bill would put them "at significant risk of being subjected to predatory lending and steered into more expensive loans," it said.

But bill sponsors said the Dodd-Frank law is having the unintended consequence of restricting access to manufactured homes because the loan origination and servicing costs violate limits set under the law.

A Section on 04/15/2015

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