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May 7, 2009

Predatory Lending Reforms Approved in U.S. House

Velázquez Measure Protects NYC Affordable Housing Buildings from Foreclosure

Washington, D.C. – The U.S. House of Representatives today approved the Mortgage Reform and Anti-Predatory Lending Act (H.R. 1728) to protect consumers by curbing abusive lending practices.  With home foreclosures impacting over two million homes between 2008 and 2009, this bill would make it illegal for lenders to make loans to borrowers who do not have a ‘reasonable ability to repay.’  Included in the legislation are two initiatives from Congresswoman Nydia M. Velázquez (D-N.Y.) to protect families living in apartment buildings in New York City and to provide prospective homebuyers with increased access and information on the benefits of home inspections.

“Predatory lending practices led us into the housing crisis, and by fighting back we can stop it in its tracks.  These are simple, common-sense protections that will ensure New Yorkers find the right home with payments they can afford,” said Velázquez, a senior member of the House Financial Services Committee.

Congresswoman Velázquez has worked to ensure that tenants in apartment buildings are protected from foreclosure, particularly those living in affordable housing complexes in New York City.  Her measure, included in H.R. 1728, would require the Department of Housing and Urban Development and the Treasury Department to develop a program to stabilize multifamily apartment buildings at risk of default, disinvestment and foreclosure.  Many affordable housing complexes and other multi-family buildings have been financed with risky mortgages.  Now, as the economy has slowed, owners and developers are at risk of default and the buildings could be left in serious disrepair. In New York City alone, between 60,000 to 90,000 units are at risk.

“Tens of thousands of New York City families have paid their rent and followed the rules, but could be left in a deteriorating building because of bad bets made by irresponsible developers. A new program to stabilize troubled buildings is vitally important, especially in New York City where more than half of our residents rent,” Velázquez said. 

In addition, the Congresswoman has worked to ensure consumers receive information about the benefits of a home inspection.  The bill approved today includes an initiative, based on Velázquez’s Consumer Protection Home Inspection Counseling Act (H.R. 2130), that requires counselors at the Department of Housing and Urban Development to be trained on voluntary home inspections.  The initiative also includes a public outreach campaign targeting low-income and first-time home buyers. 

“A professional inspection gives consumers a leg up when dealing with lenders and can save thousands of dollars in repairs down the road,” said Velázquez.   “Improved counseling services will empower New Yorkers to make informed decisions about what is best for them and avoid predatory lending practices.”