"While some of my colleagues on the other side of the aisle have forgotten those days, I haven't. I remember how predatory lenders targeted unsuspecting homebuyers by hiding fees and obscuring loan costs, tricking them into exploding mortgages, and locking them into loans that they really couldn't afford. Millions of homebuyers were steered into high cost subprime loans, even when they qualified for prime mortgages. And lenders didn't even bother to verify whether or not borrowers had the ability to repay their mortgages. They weren't required to do that and so they didn't. The end result was rampant fraud on a massive scale, to millions of foreclosures, and a tremendous loss of generational wealth, particularly for black homeowners. Some of my constituents are still struggling and trying to recover from the financial devastation that occurred during this financial crisis.
"The last thing
"Prior to the enactment of Dodd-Frank, lenders were able to earn tremendous profits through lucrative kickbacks paid by their affiliates. The Real Estate Settlement Procedures Act, or RESPA, prohibits giving a "fee, kickback, or thing of value" in exchange for a referral of business related to a real estate settlement service. But this kickback prohibition does not apply to affiliated companies of lenders, like a title insurance firm. To avail themselves of this kickback loophole, some lenders have bought, or created businesses, to enable them to profit directly from the relationship.
"The points and fees cap included under the QM definition includes, among other things, real estate-related fees paid to affiliates of the lender for services, such as property appraisals, settlement services, and title insurance. Fees paid to affiliates of the lender pose greater risks to borrowers, since lenders can steer borrowers directly to their affiliates--without open competition--and higher prices charged by affiliates directly benefit the lender.
"Affiliated title insurance is especially problematic. The title insurance industry is notoriously opaque. Due to a lack of competition and readily available information on terms and pricing, consumers do not shop around for title insurance as they might for other products and services.
"And megabanks, like Wells Fargo, have used title insurance to take advantage of consumers through illegal kickback schemes.
"Supporters of the bill argue that, because individual states provide adequate regulation over the title insurance industry, it is unnecessary, they say, to have additional safeguards related to affiliated title companies and the fees they charge. However, research from the
"Finally, a long list of groups, including civil rights groups such as the
"So for all these reasons, I strongly urge my colleagues to join me in opposing H.R. 1153. And, with that, I reserve the balance of my time."