[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H. Con. Res. 391 Introduced in House (IH)]
110th CONGRESS
2d Session
H. CON. RES. 391
Recognizing the disparities that are associated with predatory lending
abuses in minority communities and expressing the sense of the Congress
that as new abuses continue to emerge, such laws should ensure that all
those responsible for representing and protecting families have the
authority to act to address these new problems.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 17, 2008
Ms. Clarke (for herself and Mr. Towns) submitted the following
concurrent resolution; which was referred to the Committee on Financial
Services
_______________________________________________________________________
CONCURRENT RESOLUTION
Recognizing the disparities that are associated with predatory lending
abuses in minority communities and expressing the sense of the Congress
that as new abuses continue to emerge, such laws should ensure that all
those responsible for representing and protecting families have the
authority to act to address these new problems.
Whereas minorities have a long history of rejection by prime-rate lenders;
Whereas subprime mortgages are typically offered to borrowers who do not meet
the credit standards for borrowing in the prime market and these loans
cater to people with blemished credit records or little experience with
debt;
Whereas inadequate attention has been paid to the concentration of these
mortgages in neighborhoods that are largely African-American, Latino, or
both;
Whereas some of the biggest lenders in minority neighborhoods are mortgage
companies that provide only subprime mortgages, not full-service banks
that do a range of lending;
Whereas a 2006 study by the Center for Responsible Lending (CRL), a nonprofit
home ownership research group, concludes that African-Americans and
Latinos are more likely to be steered into high-risk subprime mortgages;
Whereas advocacy groups say poor and minority borrowers who qualify for
traditional mortgages are frequently nevertheless steered into mortgages
that reset automatically to much higher interest rates after a short
``teaser'' period resulting in payment increases of hundreds of dollars
each month;
Whereas these subprime mortgages are characterized by low ``introductory''
interest rates, usually for the first 2 or 3 years and these rates
frequently rise rapidly in subsequent years;
Whereas African-Americans and Latinos are getting charged for more expensive
mortgage loans than White borrowers, even when they have equal credit
histories;
Whereas a nonprofit organization dedicated to eliminating abusive financial
practices examined 50,000 mortgages and discovered that the two minority
groups were almost a third more likely to pay more for a loan than
similarly situated White borrowers;
Whereas the Center for Community Change reports that African-American and Latino
borrowers are more likely to recieve subprime loans than White
borrowers;
Whereas Harvard Law School Professor Howell Jackson has conducted research
demonstrating racial disparities in loan costs due to yield-spread
premiums;
Whereas Professor Jackson's research has concluded that African-Americans pay an
additional up front charge averaging $474 per loan, while Latinos pay an
average additional $580 per loan on average;
Whereas other causes of pricing disparities may include the inconsistent
application of objective pricing criteria, targeting of families of
color by higher rate lenders or brokers, and lack of investment by lower
cost lenders in minority communities;
Whereas information from the United States Federal Reserve demonstrates that
African-Americans are 3.2 times more likely to receive a subprime loan
than White borrowers;
Whereas in 2007, the number of homeowners defaulting on subprime mortgages began
to soar;
Whereas it is estimated that as many as 2,200,000 households are at risk of
defaulting on their subprime loans and losing their homes;
Whereas minorities are facing foreclosure or losing their homes
disproportionately; and
Whereas Latino civil rights organizations say that this discrimination affects
the large wave of first-time and first-generation Latino home buyers who
are showing up in the housing market: Now, therefore, be it
Resolved by the House of Representatives (the Senate concurring),
That the Congress--
(1) recognizes that for most types of subprime mortgages,
borrowers of color are more likely to receive higher rate loans
and there are many factors that have played roles in making
these mortgages more costly to these borrowers;
(2) encourages fair pricing of home mortgages that is based
only on legitimate risk factors and facilitates economic
progress for all borrowers;
(3) encourages lenders to eliminate discretionary pricing
in the subprime mortgage market and prompts them to adopt
transparent, market-driven prices for mortgages representing
similar risks;
(4) encourages more transparency by--
(A) addressing yield-spread premiums in laws
designed to protect homeowners from abusive lending
practices;
(B) prohibiting yield-spread premiums subprime and
nontraditional home loans;
(C) improving transparency of yield-spread premiums
by requiring brokers to explain to applicants what the
rate, payment, and fees on the loan could be with and
without the yield-spread premium;
(D) following the trends of the securities
industry, holding lenders and brokers responsible for
providing loans that are suitable for a given borrower;
and
(E) prohibiting prepayment penalties in subprime
loans;
(5) encourages preventing pricing discrimination by
requiring subprime lenders to disclose more detailed pricing
and underwriting information in their Home Mortgage Disclosure
Act data;
(6) encourages regulators to report annually on the number
of fair lending examinations performed and for each examination
provide publicly available information, including--
(A) identifying the indicators of potential
discriminatory activity, if any; and
(B) identifying the protected class or classes
believed to be potentially disadvantaged by such
activity, and the outcome of each review;
(7) encourages public and private partnerships to ensure
responsible investments are made in underserved communities;
(8) recognizes that policymakers should review whether
lower cost lenders need additional incentives to help meet the
credit needs of communities of color;
(9) upholds the laws and regulations that prohibit
predatory, irresponsible subprime lending and have proven
effective in reducing the number of abusive loans while
maintaining a vibrant market for subprime home loans;
(10) urges policymakers to endorse legislation that builds
on the proven methods for protecting families from abusive
lending while retaining access to subprime credit; and
(11) urges policy makers to oppose pre-emption of State and
local laws designed to protect homeowners.
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