Garrett's Statement On His Mortgage Vote

As noted earlier today, if Representative Scott Garrett decided to shed some light as to why he joined 14% of voting Members in opposing cracking down on predatory lending and fraud I'd post it. It's roughly the same "if we take the fraud and dishonesty out of the process, you the consumer will be hurt" line of logic he used justifying being opposed to credit card reform.

Here's his statement:

“At a time when millions of Americans are still feeling the pain from the credit crisis, this bill will further restrict credit options for consumers and decrease liquidity in our nation’s mortgage markets.

“Additionally, it’s unfortunate that this bill does not do anything to reform Fannie Mae and Freddie Mac. As these two entities have been identified among the leading causes of the financial crisis, it should be a top priority to address the problems with them as soon as possible.

Garrett had issued this statement on an earlier version of the bill that I had missed:

“The intent of the Mortgage Reform and Anti-Predatory Lending Act is to improve mortgage lending regulation. Unfortunately, this legislation has the potential to limit the accessibility of home financing options for consumers, while increasing the cost of credit. Due to its breadth in scope, there is the potential for many unintended consequences in the marketplace, as the legislation affects everyone from the mortgage originators that make loans to the securitizers that package the loans in the secondary market.

“I do appreciate the intent of the bill, which is to increase underwriting standards and protect borrowers. In actuality, though, this bill is flawed in many ways, as it contains a weak safe harbor provision, increases the liability for assignees and securitizers and places a larger class of loans under the Home Ownership and Equity Protection Act’s (HOEPA) high-cost provisions.

“In addition, the risk retention requirements as structured will force lenders to markedly increase their capital, which will further narrow credit choices and increase the cost of borrowing for consumers. I applaud Chairman Frank for his efforts in trying to address the important issue of risk retention, however, I believe there are ways to construct this provision more effectively. I look forward to working with him to find solutions for this matter, possibly in the form of covered bonds, which have the potential to aid in returning liquidity to the mortgage market with their high underwriting standards and may also serve as an alternative to securitization.”