Some major consumer-oriented components of the bill include:
- A strong consumer agency was created to protect consumers and enforce regulations on mortgages, credit cards and other financial products; the agency will be led by a presidential appointee.
- Protections against predatory lending were included in the bill. A new minimum underwriting standard will be created to ensure lenders verify a borrowers ability to repay a loan. The bill also bans payments to mortgage originators who steer borrowers into high-priced loans. The bill provides protection against prepayment penalties and abusive loan fees.
The rub: The Bureau of Financial Consumer Protection needs a strong director and independence from other agencies to do its job well. The consumer protections in the bill are not bullet-proof, and are subject to the influence of the banking regulators.
Fixing the Damage Caused by the Financial Crisis
- Authorizes $1 billion in assistance to unemployed borrowers facing foreclosure, and additional funds for housing counseling.
- Provides $1 billion for the Neighborhood Stabilization Program fund which addresses vacant and abandoned properties.
The rub: The bill doesn’t wholly address the damage caused to the housing markets, or to national employment. A comprehensive foreclosure prevention plan is needed. Job creation must be addressed.
- Data enhancements to the Home Mortgage Disclosure Act (HMDA), which include loan terms and conditions and borrower characteristics.
- Data enhancements to small business lending, including borrower characteristics, so the extent of business lending to underserved small businesses can be ascertained.
- A default and foreclosure database that would serve as an early warning system enabling stakeholders to take early action when data shows a spike in foreclosures.
- A database of individual loan records in the Home Affordable Modification Program (HAMP) program. This will increase the accountability of the industry for modifying distressed loans.
The rub: The bill significantly enhances data regarding home and small business lending, but could have provided more useful data regarding bank deposits.
About the National Community Reinvestment Coalition (NCRC):
The National Community Reinvestment Coalition is an association of more than 600 community-based organizations that promote access to basic banking services, including credit and savings, to create and sustain affordable housing, job development, and vibrant communities for America’s working families.