This morning the Senate approved the Merkley-Klobuchar amendment to the Restoring American Financial Stability Act of 2010. The amendment is pretty common sense and very consumer friendly, which is why 36 Republicans opposed it.
Senator Merkley explained the intent of his amendment on his website:
The Merkley amendment will ban mortgage lenders and loan originators from accepting payments based on the interest rate or other terms of the loans. It would also prohibit a loan originator from receiving compensation from any party other than the borrower if they have already been compensated by the consumer. In addition, it will require lenders to verify borrowers’ ability to repay their loans from income and assets other than the home’s value. To help homeowners better afford the up-front costs of their mortgage, the legislation will still allow homebuyers to finance their closing costs as part of their loan…
…Under the current rules, mortgage lenders and loan originators are allowed to steer families into high-cost and riskier loans, even when they qualify for affordable loans. A Wall Street Journal study found that 61 percent of the subprime loans that originated in 2006 went to families who qualified for prime loans. This practice was a key driver of the housing bubble and, ultimately, the foreclosure crisis that has devastated communities across the nation.
Although the amendment was co-sponsored by Republican Sens. Olympia Snowe of Maine and Scott Brown of Massachusetts, it was only able to attract three additional votes (Collins, Lugar, and Grassley) from the GOP. I don’t know if there can be any clearer indication of where the Republicans stand. They voted against banning no-doc mortgages, and they voted against prohibiting loan originators from ripping consumers off by giving them higher interest loans than what they should get based on their credit risk. Incredible. Whose bidding do you think the Republicans were doing this morning?
