skip to main content

H.Con.Res. 391 (110th): Recognizing the disparities that are associated with predatory lending abuses in minority communities and expressing the sense of the Congress that as new abuses continue to emerge, such laws should ensure that all those responsible for representing and protecting families have the authority to act to address these new problems.

The text of the resolution below is as of Jul 17, 2008 (Introduced). The resolution was not adopted.



2d Session

H. CON. RES. 391


July 17, 2008

(for herself and Mr. Towns) submitted the following concurrent resolution; which was referred to the Committee on Financial Services


Recognizing the disparities that are associated with predatory lending abuses in minority communities and expressing the sense of the Congress that as new abuses continue to emerge, such laws should ensure that all those responsible for representing and protecting families have the authority to act to address these new problems.

Whereas minorities have a long history of rejection by prime-rate lenders;

Whereas subprime mortgages are typically offered to borrowers who do not meet the credit standards for borrowing in the prime market and these loans cater to people with blemished credit records or little experience with debt;

Whereas inadequate attention has been paid to the concentration of these mortgages in neighborhoods that are largely African-American, Latino, or both;

Whereas some of the biggest lenders in minority neighborhoods are mortgage companies that provide only subprime mortgages, not full-service banks that do a range of lending;

Whereas a 2006 study by the Center for Responsible Lending (CRL), a nonprofit home ownership research group, concludes that African-Americans and Latinos are more likely to be steered into high-risk subprime mortgages;

Whereas advocacy groups say poor and minority borrowers who qualify for traditional mortgages are frequently nevertheless steered into mortgages that reset automatically to much higher interest rates after a short teaser period resulting in payment increases of hundreds of dollars each month;

Whereas these subprime mortgages are characterized by low introductory interest rates, usually for the first 2 or 3 years and these rates frequently rise rapidly in subsequent years;

Whereas African-Americans and Latinos are getting charged for more expensive mortgage loans than White borrowers, even when they have equal credit histories;

Whereas a nonprofit organization dedicated to eliminating abusive financial practices examined 50,000 mortgages and discovered that the two minority groups were almost a third more likely to pay more for a loan than similarly situated White borrowers;

Whereas the Center for Community Change reports that African-American and Latino borrowers are more likely to recieve subprime loans than White borrowers;

Whereas Harvard Law School Professor Howell Jackson has conducted research demonstrating racial disparities in loan costs due to yield-spread premiums;

Whereas Professor Jackson’s research has concluded that African-Americans pay an additional up front charge averaging $474 per loan, while Latinos pay an average additional $580 per loan on average;

Whereas other causes of pricing disparities may include the inconsistent application of objective pricing criteria, targeting of families of color by higher rate lenders or brokers, and lack of investment by lower cost lenders in minority communities;

Whereas information from the United States Federal Reserve demonstrates that African-Americans are 3.2 times more likely to receive a subprime loan than White borrowers;

Whereas in 2007, the number of homeowners defaulting on subprime mortgages began to soar;

Whereas it is estimated that as many as 2,200,000 households are at risk of defaulting on their subprime loans and losing their homes;

Whereas minorities are facing foreclosure or losing their homes disproportionately; and

Whereas Latino civil rights organizations say that this discrimination affects the large wave of first-time and first-generation Latino home buyers who are showing up in the housing market: Now, therefore, be it

That the Congress—


recognizes that for most types of subprime mortgages, borrowers of color are more likely to receive higher rate loans and there are many factors that have played roles in making these mortgages more costly to these borrowers;


encourages fair pricing of home mortgages that is based only on legitimate risk factors and facilitates economic progress for all borrowers;


encourages lenders to eliminate discretionary pricing in the subprime mortgage market and prompts them to adopt transparent, market-driven prices for mortgages representing similar risks;


encourages more transparency by—


addressing yield-spread premiums in laws designed to protect homeowners from abusive lending practices;


prohibiting yield-spread premiums subprime and nontraditional home loans;


improving transparency of yield-spread premiums by requiring brokers to explain to applicants what the rate, payment, and fees on the loan could be with and without the yield-spread premium;


following the trends of the securities industry, holding lenders and brokers responsible for providing loans that are suitable for a given borrower; and


prohibiting prepayment penalties in subprime loans;


encourages preventing pricing discrimination by requiring subprime lenders to disclose more detailed pricing and underwriting information in their Home Mortgage Disclosure Act data;


encourages regulators to report annually on the number of fair lending examinations performed and for each examination provide publicly available information, including—


identifying the indicators of potential discriminatory activity, if any; and


identifying the protected class or classes believed to be potentially disadvantaged by such activity, and the outcome of each review;


encourages public and private partnerships to ensure responsible investments are made in underserved communities;


recognizes that policymakers should review whether lower cost lenders need additional incentives to help meet the credit needs of communities of color;


upholds the laws and regulations that prohibit predatory, irresponsible subprime lending and have proven effective in reducing the number of abusive loans while maintaining a vibrant market for subprime home loans;


urges policymakers to endorse legislation that builds on the proven methods for protecting families from abusive lending while retaining access to subprime credit; and


urges policy makers to oppose pre-emption of State and local laws designed to protect homeowners.