Voting 300 for and 114 against, the House on May 7 passed a bill (HR 1728) to outlaw practices associated with subprime loans and the U.S. housing meltdown. The bill requires lenders to keep a financial stake in loans they sell into the securities market; assigns legal liability to those who originate and securitize mortgages; bars loans to borrowers who show "no reasonable ability" to pay, and outlaws refinancings aimed mainly at generating fees for the lending industry.

The bill prohibits early-repayment penalties designed to trap borrowers in bad mortgages; excessive late-payment penalties; requirements that borrowers waive their right to sue lenders, and the issuance of single-premium credit insurance. The bill also sets federal standards for property appraisals and bans the steering of borrowers into subprime loans when they qualify for conventional mortgages.

Additionally, the bill authorizes Department of Housing and Urban Development grants for credit counseling and state and local programs to educate low-income borrowers on obtaining home loans and averting foreclosures.

Brad Miller, D-N.C., said: "The mortgages that got us in this mess were shameful. It is shameful that this Congress, that this government, ever allowed those mortgages to happen. This bill will begin to put an end to it, to make sure it never happens again."

Jeb Hensarling, R-Texas, said the bill would "ensure that consumers lose their choices. It will make interest more expensive. It will protect...people out of their homes and effectively take away the American dream....We shouldn't force people who are struggling to pay their own mortgages to pay their neighbors' as well."

A yes vote was to pass the bill.

VOTE H-1 slugged PREDATORY

MINNESOTA Voting yes: Tim Walz, D-1, Betty

McCollum, D-4, Keith Ellison, D-5, Collin Peterson,

D-7, James Oberstar, D-8

Voting no: John Kline, R-2, Erik Paulsen, R-3,

Michele Bachmann, R-6

MORTGAGE-BACKED SECURITIES: The House on May 7 rejected, 171 for and 252 against, an amendment to strip HR 1728 (above) of its legal liability for third parties who convert home loans into mortgage-backed securities.

Jeb Hensarling, R-Texas, called the provision "a plaintiff's lawyer's dream, and so we will have an explosion of liability exposure. Why would people want to invest? Why would people want to securitize?"

Melvin Watt, D-N.C., said that if the amendment were adopted, "We will be right back where we are right now because nobody in the chain of custody of that loan, other than the original lender, will have any liability."

A yes vote backed the amendment.

VOTE H-2 slugged MORTGAGE

MINNESOTA Voting yes: Kline (MN), Paulsen,

Bachmann

Voting no: Walz, McCollum, Ellison, Peterson,

Oberstar