This week, the Senate approved by a 63-36 margin an amendment (S. Amdt. 3962) to the Restoring American Financial Stability Act of 2010 (S. 3217) – the financial reform bill currently under Senate consideration – that would prevent mortgage brokers from receiving bonuses for signing borrowers to high interest loans. Introduced by Sens. Jeff Merkley (D-OR) and Amy Klobuchar (D-MN), this amendment would ban mortgage lenders and loan originators from accepting payments based on the interest rate or other terms of high-interest loans, and require lenders to document income and other underwriting standards to ensure that borrowers are able to repay their loans. According to a statement released from Sen. Merkley’s office, doing so would “end the damaging and deceptive practice of ‘no doc’ and ‘liar loans.’”
In a statement, Klobuchar added that these “[c]omplex and deceitful lending practices were at the heart of the financial crisis. As we work to reform Wall Street, we must establish safeguards to protect consumers from predatory loan practices. Helping everyday Americans obtain sound loans while avoiding unnecessary risk is essential to restoring our economy.”
To date, more than 300 amendments to the financial reform bill have been introduced. The Senate will continue to consider amendments to the bill next week. Senator Harry Reid (D-NV) is expected to file cloture on the bill, setting up a vote on final passage by the end of next week.
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