Title: Mortgage Reform and Anti-Subprime Lending Act
Vote Smart's Synopsis:
Vote to pass a bill that standardizes licensing requirements for mortgage loan originators and requires the maximum costs of a mortgage loan to be stated in the contract.
Prohibits an individual from becoming a loan originator unless they can obtain and maintain a registration as a loan originator or a license as a state-licensed loan originator and an identification number assigned by the Nationwide Mortgage Licensing System and Registry (NMLSR)(Sec. 103).
Requires anyone applying for registration as a state-licensed loan originator to supply information concerning the applicant's identity to the NMLSR for a background check, complete at least 20 hours of education as approved by the NMLSR, and pass a test developed by the NMLSR (Sec. 104).
States that lenders cannot receive a license if they have had a similar license revoked in any governmental jurisdiction in the previous five years, or if the applicant has been found guilty or has pled no contest to a felony in any court in the last seven years (Sec. 104).
Requires federal banking agencies, the Federal Trade Commission, and the Secretary of Housing and Urban Development to establish regulations that prohibit mortgage lenders from steering borrowers to loans that the borrower lacks a "reasonable ability" to repay, that include equity stripping or excessive fees, or that, in cases of residential mortgage refinances, do not provide the borrower with a net tangible benefit (Sec. 123).
Allows civil action to be taken against a creditor for the recession of a residential mortgage loan in violation of the Truth in Lending Act, unless the creditor corrects the violation within 90 days of notification (Sec. 204).
Requires mortgage contracts to state the maximum amount of any payments and the additional amount required every month to cover taxes or insurance (Sec. 213).
Establishes the universal mortgage disclosure requirement for good faith estimates, which must disclose the total loan amount, what type of loan it is, the length of the loan period, the estimated interest rate (APR) and the maximum it can adjust to, the total estimated monthly payment and what percentage it is of a borrower’s monthly income, the period to lock an interest rate, any prepayment penalties that exist, any increased final payment, any settlement charges, and the estimated cash needed at closing (Sec. 501).