Date: 1988-06-20
Speaker: ST GERMAIN (democrat)
Chamber: H

Mr. Speaker. the legisla. tion before us. the Home Equity Loan Consumer Protection Act of 1980 is one of the most Important consumer measures to come before the Congress in years. Today. millions of homes across the Nation are being placed on the line as security for loans. When families enter into these loan contracts blindly. when they are handed misleading Information. and when the rules of the game are changed at halftime. homesusually a familys biggest assetare placed at risk. H.R. 3011. as amended. would provide consumers with disclosures of all aspects of the loan commitmentup front before the contract is locked in forevermoreno hidden fees. no hidden terms that the lender can impose on unsuspecting homeowners. The legislation would also establish standards for the advertising of home equity loansputting an end to carnivaltype advertising that lures homeowners Into deals they cant aord. The bill would also require that the interest rates on these loans be tied to an index outside the control of the lender. Thus. the consumer would be assured that there cou!d be no manipulation by the lender after the fact. Most Important. Mr. Speaker. the lender could not unilaterally change tile terms of a loan during the life of the contract except under very limited conditions. Mr. Speaker. loans tied to equity in homes are a valuable and useful source of credit for many consumers. They are providing funds for a variety of purposes including education. They are Increasingly popular with consumers and clearly these secured loans are profitable for lenders. H.R. 3011 does nothing to discourage this growing activity. The legislation simply assures that families may enter these home equity contracts armed with the maximum Information and assured they are not pledging their homes on the basis of some advertising sleight of hand. It is legislation which benefits both legitimate lenders and serious borrowers. Mr. Speaker. this legislation Is designed to give consumers. when they start shopping for a loan. solid information on which to make decisionsaccurate and complete Information about charges that can be imposed at any point from application to the termination of a home equity loan. Only with full and accurate information about all charges can a borrower shop for the best credit deal and. more Important. determine whether the loan Is affordable before anytliing Is signed. Home equity loans are available from a variety of sources. All classes of depository Institutionscommercial banks. savings banks. credit unions. and savings and loan associationsoffer home equity loans. So that the consumer may*shop for credit and compare terms. H.R. 3011 Is designed to provide uniform requirements for all Institutionssimilar restrictions and disclosures. We have attempted to avoid exceptions from one type of institution to anotherexceptions that would serve to confuse and make It more difficult for the consumer to compare terms and conditions. Most Important. Mr. Speaker. It is intended that the consumer receive full information up frontwhile the shopping Is still underway. We want families who are putting their homes on the line to be able to go home with the lenders brochures. sit down at the kitchen table. compare terms. and calculate whether the loan is affordable under their economic circumstances. Legitimate lenders. operating in a free and open marketplace. have no difficulty putting all the facts on the table and letting good old American competition settle the issue. Mr. Speaker. I want to pay special tribute to our colleague from North Carolina. DAVID PRICE. who has long championed this legislation and who has pushed diligently to give the consumer maximum protection. He deserves great credit for keeping this high on the legislative agenda. All of us are well aware of the hard work and wise counsel that the chairman of the Consumer Affairs Subcommittee. FRANK ANNuNzio. has provided in moving H.R. 3011 forward. Our colleague from New York. CHUCK SCHUMER. early on recognized the problorr! surrounding home equity loans and introduced disclosure leqislalion. a substantial part of which is incorporated in the bill before us today. Mr Spoaker. I hope H.R. 3011 will have the overwhcornir. iupport of the House.