WASHINGTON -
The bill establishes new curbs on subprime loans by restricting prepayment penalties and barring the financing of fees and points and other practices that increase the risk of foreclosure. But it will also require licensing for all lenders and create a national registry, much like the one in existence for securities brokers; it will establish liability for loans sold by originators on the secondary market; and require all lenders to determine a borrower's ability to repay the loan before approving a mortgage.
"What we have today is a bill that cannot undo what happened, but it makes it much less likely it will happen in the future," said Rep. Barney Frank, the Massachusetts Democrat who chairs the House Financial Services Committee and chief sponsor of the measure.
The bill now goes to the Senate, where similar legislation has been stalled for weeks.
Another bill that would give bankruptcy judges the power to amend the terms of mortgages has also been stalled in both the House and Senate.
Yet another bill introduced in the House would set new standards for mortgage servicing, brokering and escrow accounts.
Observers expected Congress to eventually combine one or more of the mortgage bills.
