Voting Record on Legislation Involving Housing and Property Issues
(2010) S Amdt 3962 Home Loan Regulation Modifications
Outcome: Amendment Adopted (63/36)
Summary: -Prohibits creditors from issuing mortgage loans unless a determination can be made that the borrower has a "reasonable ability" to repay the loan and all applicable taxes, insurance, and assessments, and specifies that such determination shall consider the following (Sec. 1075):
-Credit history;
-Current income;
-Expected income;
-Current obligations;
-Debt-to-income ratio, or the residual income the consumer will have after paying non-mortgage debt and mortgage-related obligations;
-Employment status; and
-Other financial resources other than equity in the dwelling or property that secures repayment of the loan.
-Requires creditors to verify the aforementioned information by reviewing the following (Sec. 1075):
-W-2 forms;
-Tax returns;
-Payroll receipts;
-Financial institution records; or
-Other third-party documents that provide "reasonably reliable" evidence of the consumer's income or assets.
-Specifies that creditors are presumed to be in compliance with the "reasonable ability to repay" requirement if the aforementioned requirements have been met and the creditor has determined the borrower's ability to repay using the maximum rate permitted under the loan during the first 5 years following consummation and the establishment of a payment schedule (Sec. 1075).
-Specifies that the aforementioned presumption of compliance shall not be applied to a loan for which the any of the following criteria are met (Sec. 1075):
-The regular periodic payments for the loan may result in an increase of the principle balance or allow the consumer to defer repayment of principal;
-The terms result in a scheduled payment that is more than twice as large as the average of earlier scheduled payments ("balloon payments"); or
-The points and fees (15 USC 1602(aa)(4)) exceed 3 percent of the total loan amount, unless, for the purposes of calculating such points and fees, the totals attributable to any premium for mortgage guarantee insurance provided by a Federal or state agency shall exclude any amount of points and fees greater than 1 percent of the total loan amount.
-Exempts the following from all of the above requirements (Sec. 1074):
-Temporary loans ("bridge loans") with terms of 12 months or less; and
-Reverse mortgages.
-Prohibits compensating a loan originator for any mortgage loan if the compensation varies based on the terms of the loan, other than the amount of the principal (Sec. 1074).
Leahy's Vote
Y
(2010) S Amdt 3955 Establishing New Mortgage Underwriting Requirements and Eliminating a Risk Retention Requirement
Outcome: Amendment Rejected (42/57)
Summary: -Repeals a requirement that, no later than 270 days after the date of enactment, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Security and Exchange Commission establish the regulations on mortgage securitizers that do all of the following (Sec. 941):
-Establish asset classes with separate rules for securitizers of different classes of assets;
-Establish underwriting standards for each asset class;
-Requires securitizers to retain not less than 5 percent of the credit risk for any asset that is transferred, sold, or conveyed through the issuance of an asset-backed security, or less than 5 percent if the securitizer meets the aforementioned underwriting standards;
-Prohibits securitizers from directly or indirectly hedging or otherwise transferring the credit risk that securitizers are required to retain;
-Specifies the permissible forms of risk retention;
-Specifies the minimum required duration of risk retention;
-Establishes a total or partial exemption of any securitization, as may be "appropriate in the public interest and for the protection of investors";
-Establishes the allocation of risk retention obligations between securitizers and an originator in the case of securitizers that purchases assets from an originator.
-Requires federal banking agencies, in consultation with the Federal Housing Finance Agency and the Department of Housing and Urban Development, to establish minimum standards for mortgage underwriting that do all of the following (Sec. 942):
-Require the borrower verify and document the income and assets relied upon to qualify for the loan, including previous employment and credit history;
-Require the down payment be equal to at least 5 percent of the purchase price of the property;
-For first lien residential mortgage loans with an initial loan to value ratio that is more than 80 percent and not more than 95 percent, require the down payment include a requirement for credit enhancements until the loan value ratio of the residential mortgage loan amortizes to a value that is less than 80 percent of the purchase price;
-Establish a method for determining the ability of the borrower to repay the mortgage based on the following factors:
-All terms of the residential mortgage, including principal payments that fully amortize the balance of the mortgage over the term of the mortgage; and
-The debt to income ratio of the borrower;
-Include any other specific standards the federal banking agencies jointly determine are appropriate to ensure "prudent underwriting" of mortgages.
-Requires federal banking agencies, in consultation with the Federal Housing Finance Agency and the Department of Housing and Urban Development, to review the aforementioned standards for mortgage underwriting ever 5 years, and authorizes the agencies to revise such standards (Sec. 942).
-Authorizes federal banking agencies, in consultation with the Federal Housing Finance Agency and the Department of Housing and Urban Development, no later than 180 days after the date of enactment, to establish exemptions from the underwriting standards for mortgage loan originators that are exempt from federal taxes, provided that the following criteria are met (Sec. 942):
-The lending activities of the mortgage loan originator do not "threaten the safety and soundness of the banking system";
-The mortgage loan originator is not compensated based on the number or value of residential mortgage loan applications accepted, offered, negotiated;
-The mortgage loan originator does not offer residential mortgage loans that have an interest rate greater than 0 percent;
-The mortgage loan originator does not gain monetary profit from any residential mortgage product or service provided;
-The mortgage loan originator has the primary purpose of serving low income housing needs;
-The mortgage loan originator has not been prohibited, by statute, from receiving federal funding; and
-The mortgage loan originator meets any other requirement that the federal banking agencies determine are appropriate for the "safety and soundness of the banking system."
-Requires federal banking agencies, in consultation with the Secretary of Housing and Urban Development and Secretary of the Treasure, to review the aforementioned exemptions to standards for mortgage underwriting ever 2 years, and authorizes the agencies to revise such standards (Sec. 942).
Leahy's Vote
N
(2010) S Amdt 3839 Termination of Fannie Mae and Freddie Mac Conservatorships
Outcome: Amendment Rejected (43/56)
Summary: -Requires the Director of the Federal Housing Finance Agency to determine if Fannie Mae and Freddie Mac are financially viable 24 months after the date of enactment (Sec. 1313).
-Requires the Director, upon determining that Fannie Mae or Freddie Mac are financially viable after 24 months, to take "all actions necessary" to terminate the conservatorship for such enterprise (Sec. 1313).
-Requires the Director, upon determining that Fannie Mae or Freddie Mac are not financially viable after 24 months, to appoint the Federal Housing Finance Agency as receiver and carry out such receivership (Sec. 1313).
-Authorizes the Director to postpone the aforementioned 24 month deadline to 30 months if the Director determines that financial markets would be adversely affected without the extension (Sec. 1313).
-Requires the receipts and disbursements, including administrative expenses, of Fannie Mae and Freddie Mac be counted as new budget authority, outlays, receipts, deficit, or surplus for the purposes of the following (Sec. 1341):
-Budget of the U.S. Government, as submitted by the President;
-Congressional budget;
-Statutory Pay-As-You-Go Act of 2010; and
-Balanced Budget and Emergency Deficit Control Act of 1985.
-Requires the face value of obligations issued by Fannie Mae and Freddie Mac be treated as issued by the U.S. Government, thereby subjecting both entities to the public debt limit (Sec. 1343).
-Requires the public debt limit be increased by the face value of obligations issued by Fannie Mae and Freddie Mac on April 15, 2010, and requires such increase be repealed once Fannie Mae and Freddie Mac no longer have an agreement with the Secretary of the Treasury for the purchase of obligations and securities (Sec. 1343).
-Prohibits Fannie Mae and Freddie Mac from purchasing any mortgage asset, unless the mortgagor has paid not less than the following (Sec. 1314):
-For mortgages purchased during the 12 month period following the 24 or 30 month period in which the Director must determine if the Fannie Mae and Freddie Mac are financially viable, 5 percent of the appraised value of the property;
-For mortgages purchased during the 12 month period following the aforementioned 12 month period, 7.5 percent of the appraised value of the property;
-For mortgages purchased during the 12 month period following the aforementioned 12 month period,
10 percent of the appraised value of the property.
-Prohibits Fannie Mae and Freddie Mac from purchasing any mortgage asset for a property having a principle obligation that exceeds the median home price, for property of the same size, for the area in which such property is subject to the mortgage is located (Sec. 1314).
-Establishes the Office of Special Inspector General for the Conservatorship of Regulated Entities within the General Accountability Office, and establishes the position of Special Inspector General, appointed by the President and confirmed by the Senate, to oversee the Office (Sec. 1321).
-Requires the Special Inspector General to conduct, supervise, and coordinate audits and investigations of the purchase, management, and sale of assets by Fannie Mae and Freddie Mac, including by collecting and summarizing the following (Sec. 1321):
-Description of the categories of mortgage assets purchased or otherwise procured, and an explanation of the reasons why the Director of the Federal Housing Finance Agency deemed it necessary to purchase each mortgage asset;
-Listing of each institution from which mortgage assets were purchased;
-Current estimate of the total amount of mortgage assets purchased since the date of appointment of the Federal Housing Finance Agency as conservator and the profit and loss of each mortgage asset;
-Description of the categories of mortgage loans modified by Fannie Mae and Freddie Mac, and an explanation of the reasons why the Director deemed it necessary to modify such mortgage loans;
-Explanation of the risk analysis procedures in place within Fannie Mae and Freddie Mac with respect to the modification process;
-Explanation of the effect of continuing the affordable housing goals of Fannie Mae and Freddie Mac;
-Impact on any funding requested and accepted as part of the Amended and Restated Senior Preferred Stock Purchased Agreement;
-Assessment of whether the budgetary treatment of the assets and liabilities of Fannie Mae and Freddie Mac is correct;
-Explanation of the trouble assets owned by the regulated entities and acquited prior to the conservatorship; and
-Description of any changes to the structure of Fannie Mae and Freddie Mac made by the Director and an explanation of how the changes will better enable Fannie Mae and Freddie Mac to be successful during and post conservatorship.
Leahy's Vote
N
(2010) S Amdt 3938 Study on Ending the Conservatorships of Fannie Mae and Freddie Mac
Outcome: Amendment Adopted (63/36)
Summary: -Requires the study to include an analysis of the following (Sec. 1077):
-The role of the federal government in supporting a sustainable housing finance system;
-To what extent the federal government, if any, should bear risks in meeting federal housing finance objectives;
-How the current structure of the housing finance system can be improved;
-How the housing finance system should support the continued availability of mortgage credit to all segments of the market;
-How the housing finance system should be structured to ensure that consumers continue to have access to 30-year, fixed rate, pre-payable mortgages and other mortgage products that have simple terms that can be easily understood;
-The role of the Federal Housing Administration and the Department of Veterans Affairs in a future housing system;
-The impact of amendments to the housing finance system on the financing of rental housing;
-The impact of amendments to the housing finance system on the secondary market liquidity;
-The role of standardization in the housing finance system;
-How the housing finance system in other countries offers insight that can assist the U.S. in amending it's housing finance system; and
-The options for transition to an amended housing finance system.
-Specifies that the recommendations may include, but are not limited to, the following options (Sec. 1077):
-Gradual reduction and liquidation of Fannie Mae and Freddie Mac;
-Privatization of Fannie Mae and Freddie Mac;
-Incorporation of the functions of Fannie Mae and Freddie Mac into a federal agency;
-Dissolution of Fannie Mae and Freddie Mac into smaller companies; and
-Any other measure that the Secretary of the Treasury deems appropriate.
-Requires the Secretary of the Treasury to submit the report and recommendations no later than January 31, 2011 to the Senate Committee on Banking, Housing, and Urban Affairs and the House Committee on Financial Services (Sec. 1077).
