Published: June 2015

Protecting borrowers, not banks, from risky loans

Coalition advocates wrote to Congress asking them to oppose H.R. 1210. The bill would change the new Qualified Mortgage rules in the Wall Street Reform and Consumer Protection Act’s Ability-to-Repay requirement. Lenders should make a good-faith effort to determine a borrower’s ability to repay a mortgage before extending them a loan. Instead, H.R. 1210 contains an unnecessary exemption that puts all the risk on the borrower and protects the lenders from legal responsibility.

Leading up to the housing crisis, many lending institutions failed to adhere to the premise of making a good-faith effort to determine whether a borrower could pay back the mortgage before they extended the loan. The Ability-to-Repay requirement and the Qualified Mortgage rule are essential components of the government’s effort to prevent irresponsible lending practices from returning to the housing market by discouraging the use of risky and predatory lending products.

H.R. 1210 is another attempt to undermine these consumer protections. The bill’s loop hole undermines current CFPB regulations put into place to protect homeowners, their home’s equity and their ability to take legal recourse against banks. Instead, the legislation provides an exemption for large lending institutions that allows banks to offer risky products, like portfolio loans, while they enjoy protections under safe harbor rules, allowing them to exploit consumers once again.

Lead Organization

Center for Responsible Lending (CRL)

Other Organizations

Americans for Financial Reform | California Reinvestment Coalition | Center for Responsible Lending | Consumer Action | Consumer Federation of America | Consumers Union | Corporation for Enterprise Development (CFED) | Leadership Conference on Civil and Human Rights | National Association of Consumer Advocates (NACA) | National Consumer Law Center (on behalf of its low-income clients) | National Fair Housing Alliance

More Information

For more information, visit CRL's website.

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Protecting borrowers, not banks, from risky loans   (OpposeHR1210.pdf)