On November 7, 2007 the House Committee on Financial Services approved the Mortgage Reform and Anti-Predatory Lending Act of 2007 (HR 3915). This bill, sponsored by Re. Bradley Miller [D-NC], does the following:

*Creates a licensing system for residential mortgage loan originators.

*Establishes standards for residential mortgage loan originations.

*Establishes minimum Standards for Mortgages. This provision requires lenders, among other things, to make a reasonable determination that the borrower has a reasonable ability to repay the loan.

*Provides additional defenses to foreclosure, strengthening rescission rights and the right to seek damages against lenders.

*Protects renters when the homes they rent go into foreclosure.

*Provides additional protections for borrowers who take out “high-cost” mortgages. For instance, it prohibits the financing of points and fees.

* Sets up the “Office of Housing Counseling”

This is obviously, a substantial bill that, if passed will have far reaching consequences. This bill will go a long way towards protecting borrowers. Licensing mortgage originators is a great idea. However, some of the provisions will result in fewer loans to homebuyers and higher interest rates to those who do qualify.

The full text of the bill can be found here.