Date: 2015-11-18
Speaker: MAXINE WATERS (democrat)
Chamber: H
State: California

Mr. Speaker. I yield myself such time as I may consume. Proponents of H.R. 1210 argue that if banks keep loans in portfolio. they have every incentive to make sure those mortgages are sustainable and good for both the bank and the borrowers. Therefore. loans held in portfolio should automatically receive the CFPBs legal safe harbor under the qualified mortgage rule. This simply ignores the history of the recent crisis. How can banks benefit from loans that are unsustainable in the long term? Lets look at how it really works: Step one. underwrite a mortgage with high. upfront fees. Though an honest broker may charge a 1 percent fee. a Better Business Bureau study from just before the crisis showed mortgage brokers often making 5 percent in upfront fees. On a $200.000 mortgage. that is $10.000 just for one loan. Other examples are appraisal fees. escrow fees. settlement fees. homeowners insurance. These fees could go back to the loan originator on an unlimited basis. and originators could still have legal protection under H.R. 1210. Step two. protect your bank from consumer defaults by requiring expensive private mortgage insurance. Step three. underwrite a large number of loans so that the fees add upvolume churn. volume churn. This has the added benefit of keeping regional home prices high by flooding the market with buyers. Step four. refuse to offer loan modifications. Banks can divest from loss mitigation processes and keep the profits from the high upfront fees and mortgage volumes. Step five. foreclose on the borrower and prevent them from suing the lender for lending violations. Once the borrower defaults. the lender can then repossess the collateral. If home prices have risen. they can sell the home for a profit all the while keeping their upfront fees. Meanwhile. H.R. 1210 would provide the lenders with a legal shield against CFPB enforcement or private fair lending litigation. Over and over. Republicans have attacked the CFPB and the important protections it provides to American consumers. Yet again. we are wasting time on the floor considering a bill the President has already pledged to veto when we could be doing other important business. What this bill does is very simple. It forgets all of the lessons of the financial crisis of 2008 and allows the countrys biggest banks to put consumers and the economy at risk by bringing back complex. highcost mortgages. The bill resurrects a practice that allows mortgage brokers to receive bonuses from the big banks in exchange for steering consumers into expensive. risky loans. After the financial crisis. the Department of Justice investigated these practices and found that minority communities were sought out by mortgage brokers and targeted for risky loans. even in the cases where the borrowers were qualified for prime loans. These are the same types of loans that destroyed the life savings of millions of Americans that ended up in foreclosure. And then when I studied foreclosure practices at the largest banks. I discovered that the same banks that made these mortgages were also guilty of robosigning. Remember that? Robosigning. wrongfully foreclosing on families that were up to date on their payments and fabricating paperwork to defraud consumers. The DoddFrank Act and the CFPB have reined in these predatory practices. yet I have had to come down to the floor over and over again to defend our work eliminating fraud in the financial system. We have already seen what happens when regulators do not do their jobs: consumers are left on the hook. We must defend the work we have done in the DoddFrank Act and the important work that CFPB continues to do. So certainly I urge a "no" vote on this legislation. It has been said over and over again by this side of the aisle that it appears that my colleagues on the opposite side of the aisle are forgetting the lessons of 2008. forgetting what happened when we brought this country to a recession. almost a depression. forgetting the communities that have been destroyed with these foreclosures. forgetting these lessons. and coming back to the Congress of the United States disregarding all of the harm that we have caused to families and communities and presenting legislation that could put them back in the same position. Well. we wonder why our constituents and consumers dont trust us anymore. They dont trust us because of these kinds of attempts to present public policy that again could harm our economy and harm these families and these communities. They wonder why it is we continue down this path. We bailed out the biggest banks in America. We bailed out big insurance companies in America. We took the taxpayers money. and we literally said to the people who had caused the harm: We forgive you. It is okay. We are going to make sure you stay in business. We are going to make sure that you have the ability to make money. And while the taxpayers watch this. still many are reeling from the loss of their homes. And homelessness has increased in my own city of Los Angeles. over 12 to 15 percent increase in homelessness. Some of those families are there because they are victims of the predatory practices that we allowed our regulators to turn their heads and bring harm to these families and these communities. I dont understand why you dont understand simply ability to repay. I dont understand why you would simply say let the biggest banks in America have portfolio loans if they dont have to be worried about qualified mortgages. I dont get it. Why dont you err. if you are going to err. on the side of the consumer? What is it about the biggest financial institutions in America that can promote this kind of public policy and have so many Members. particularly on the opposite side of the aisle. doing their bidding? I dont get it. I dont understand. and I dont understand why many of your constituents dont really know what is going on. Mr. Speaker. this is not easy work. As you know. working on the Financial Services Committee is extremely difficult and timeconsuming work. Here we are divided: one side of the aisle going back to the risky days. another side of the aisle protecting the Consumer Financial Protection Bureau and saying that we have to protect that Bureau no matter how much you attack it. Again. I want to remind you. before DoddFrank and this centerpiece that was organized for reform. where we created the Consumer Financial Protection Bureau. think about the nameConsumer. Financial. Protection. Bureauprotecting those who had been dropped off the protection agenda by our own regulators. So we created something. and we named it in such a way that consumers and our constituents would understand that we are sorry for what happened to them and we dont like the fact that we almost destroyed this economy. We support the Consumer Financial Protection Bureau. We will not go back to those days prior to 2008. and. whether you like it or not. this Bureau is here to stay. and we are going to defend it with every ounce of energy that we have. I yield back the balance of my time.