October 24, 2007

Statement of Chairman Dodd on House Predatory Lending Legislation

“I congratulate Congressmen Miller, Watt, and Chairman Frank and their staffs who, I know, have been working extremely hard to put this legislation together. I intend to study the proposed legislation as I draft a bill with my colleagues. As I have said before, to be effective, legislation must meet two tests: first, it must establish strong standards against abusive practices such as prepayment penalties, steering, and other problems. Second, it must provide for strong enforcement. The problem in the market today is that none of the market players have a stake in the long-term success of the mortgage: brokers get paid on volume; lenders quickly sell off most subprime loans to Wall Street; and Wall Street slices and dices the mortgages into securities and sells them off. They all make their money whether or not the borrower can afford the loan. The homeowner is left holding the bag. Together, strong standards and tough remedies will reward affordable loans and punish predatory lending. In my view, that is the measure of a successful bill, and that is what my bill will do. “Homeowners shouldn’t be victims of financial ‘hit-and-runs’ when it comes to their most precious asset – their homes. But too often, far too many homeowners are victimized by predatory lending practices that leave them struggling to save their homes from foreclosure. That is wrong and must change.”