H.R. 3915, The Mortgage Reform and Anti-Predatory Lending Act of 2007, passed the House by a vote of 291 to 127 on Thursday 11/15/2007, the first major step in the 3-step legislative process. The bill now heads to the Senate where, if it passes, it would then go to the President for his approval.

All in all it was a pretty good day for mortgage professionals. Yield Spread Premiums and FHA were not affected in House's version of the bill, which is great news. Increased loan officer and mortgage company liability failed, and increased fines were withdrawn from the bill's text. However, the National Mortgage Licensing System and Registry as well as the provision calling for educational requirements did survive in the House's final version of the bill.

When it comes to loans with prepayment penalties, the bill requires that options without prepayment penalties be provided as well, which could definitely affect these products. Among other disclosures, the bill requires strict ARMs disclosures, including a six-month notice prior to reset and options to help borrowers respond if they cannot handle their future payments.

Whether or not this version of the bill will become law is hard to say, but analysts agree that the provisions for the licensing system and registry and continuing education are the best bets to pass in any version that would become law. A great feature of the national registry is that this system would help create safeties against predatory lenders who close shop in one state and move on to the next. He says that continuing education, as yet undefined in the bill's text, is something that would likely have to be created from within the industry.

Language is open to interpretation, so you might see differing reports in the media, if you haven't already.

John Thomas

Citizens Lending Group

www.DelawareMortgageLoans.net