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Senate Proceeding on Apr 3rd, 2008 :: 2:36:57 to 2:53:35
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John Cornyn

2:36:41 to 2:36:57( Edit History Discussion )

John Cornyn: just like to say that i'mha a cosponsor of the durbin amendment and very happy to supportt it. but later, senator martinez and i will be submitting. senator martinez is in the banking committee

Dianne Feinstein

2:36:57 to 2:37:17( Edit History Discussion )

Dianne Feinstein: and will be coming to the floor shortlyly, but i wanted to take advantage of this opportunity to speak a little bit about this amendment. it is also supported by senators boxer, obama, salazar, dole, durbin,

Dianne Feinstein

2:36:57 to 2:53:35( Edit History Discussion )
Speech By: Dianne Feinstein

Dianne Feinstein

2:37:17 to 2:37:36( Edit History Discussion )

Dianne Feinstein: and clintonnd. and essentially this amendment deals with the fact that today there just is a very thin patchwork of state licensing for brokers. it is insufficient. there are no national standards

Dianne Feinstein

2:37:36 to 2:37:53( Edit History Discussion )

Dianne Feinstein: for the licensing of a broker, mortgage broker, in this subprime marketplace. and additionally, in many states, there are really no requirements. what that has done is enable bad actors to flourish.

Dianne Feinstein

2:37:53 to 2:38:10( Edit History Discussion )

Dianne Feinstein: and i want to give you two examples of what a bad actor as a subprime mortgage broker actually means. i net family in los angeles last week. this is the simmons family. mr. simmons worked for northrop

Dianne Feinstein

2:38:10 to 2:38:25( Edit History Discussion )

Dianne Feinstein: grumman for 20 years. mrs. simmons has been a checker at alpha beta for 26 years. they are retired. they have owned this nome los angeles for 39 years. mr. simmons had a stroke, and when he had this stroke,

2:38:25 to 2:38:49( Edit History Discussion )

they obviously had additional medical expenses. last year, they were in the market for a better rate than the 8% they were paying onin the loan on their house which remained, which was $550,000.

Dianne Feinstein

2:38:49 to 2:39:08( Edit History Discussion )

Dianne Feinstein: they got a cold call from an unlicensed broker. he offered them a $629,000 loan with these terms: $25,000 cash back, a 4.5% interest rate, and monthly payments of $2,000 after four months at $5,300

Dianne Feinstein

2:39:08 to 2:39:25( Edit History Discussion )

Dianne Feinstein: to lower the interest rate. well, they studied it and they said, we can afford this. and they did it. here is what really happened. the interest rate was 11.2% not 4.5%. there was no cash back. the

Dianne Feinstein

2:39:25 to 2:39:40( Edit History Discussion )

Dianne Feinstein: monthly payments were $5,300 every month. they called about it and they were told it just wasn't true, the paper they signed was $5,300 every month for the length of the mortgage. and then they learned

Dianne Feinstein

2:39:40 to 2:39:55( Edit History Discussion )

Dianne Feinstein: not only there was no cash back but this broker walked off with $20,000 in his pocket. now, these are retired people. they were confronted with hundreds of pages of loan documents filled with

Dianne Feinstein

2:39:55 to 2:40:09( Edit History Discussion )

Dianne Feinstein: small printed. they trusted their broker. not too long ago my husband and i bought a home. we tru sted our broker. he went w through the papers t with us. candidly, i do not believe mostve people read

Dianne Feinstein

2:40:09 to 2:40:25( Edit History Discussion )

Dianne Feinstein: every line of what amounts to a stack about this high of papers when you buy a home. now, for the simmons family, they've dipped into their life savings. they are afraid they may lose their home.

Dianne Feinstein

2:40:25 to 2:40:43( Edit History Discussion )

Dianne Feinstein: and it is exactly e the type of situation our bill would prevent. now, let me give you another story of steve and valvina mcfadden. they live in fresno and they are with their children and their dog

Dianne Feinstein

2:40:43 to 2:41:05( Edit History Discussion )

Dianne Feinstein: in front of their house. they have two teenage daughters. steve is an assemblyman -- excuse me, assembly line worker. valvina is an office assistant. they both work. in 2005, a bank told them they

2:41:05 to 2:41:23( Edit History Discussion )

could handle a mortgage of up to $135,000. so when they saw their dream home the next year listed at $250,000, they thought it was out of reach. but a broker steered them into two mortgages for $250,000

Dianne Feinstein

2:41:23 to 2:41:42( Edit History Discussion )

Dianne Feinstein: for only $1,000 down. $1,000 down with an adjustable interest rate. their combined monthly payments were $1,600. now, the mcfaddens have weak credit, modest income, and two children to raise. they

Dianne Feinstein

2:41:42 to 2:42:01( Edit History Discussion )

Dianne Feinstein: told their broker they couldn't afford this loan. the broker told them not to worry, that their monthly payments includedheir property taxes, their mortgage insurance, and a warranty for home repairs.

Dianne Feinstein

2:42:01 to 2:42:13( Edit History Discussion )

Dianne Feinstein: well, did that turn out? no. here's what the real deal was. no money toward their property taxes. no money toward insurance. and no warrant. it was canceled without their knowledge. and no warranty. rait

Dianne Feinstein

2:42:13 to 2:42:30( Edit History Discussion )

Dianne Feinstein: was canceled without their knowledge. these are two examples ofxa what's happened happening in california. many americans trying to get a piece of the american dream have actually been sold a bill

Dianne Feinstein

2:42:30 to 2:42:47( Edit History Discussion )

Dianne Feinstein: of goods by unscrupulous brokers and lenders. wh i was in los angeles, the san bernardino district attorney, the los angeles district attorney and the state he attorney general had just arrested nine bad actors

Dianne Feinstein

2:42:47 to 2:43:00( Edit History Discussion )

Dianne Feinstein: in the mortgage broker business. so it is going on all the time. people are told, "don't worry. you don't need a big down payment. you can get into a zero interest loan. don't worry about what you're

Dianne Feinstein

2:43:00 to 2:43:18( Edit History Discussion )

Dianne Feinstein: getting into. home values always rise. don't worry about at adjustable interest rate. you can always refinance. don't worry, you can't lose." well, the fact of the matter is, you can lose and you can

Dianne Feinstein

2:43:18 to 2:43:33( Edit History Discussion )

Dianne Feinstein: lose big. and i can say everybody should read the fine print and take the time and understandan exactly what their mortgage documents say. but the fact is, people have difficulty understanding these

Dianne Feinstein

2:43:33 to 2:43:49( Edit History Discussion )

Dianne Feinstein: very legal documents and they toned depend on their mortgage broker. and they tend to depend on their mortgage broker. so the damage is really staggering. more 2 million filings last year and another

Dianne Feinstein

2:43:49 to 2:44:06( Edit History Discussion )

Dianne Feinstein: 2 million expected this year. senator boxer's and my state is ground zero. four of the ten metropolitan areas with the highest foreclosure rate in the nation are in california. c number two is stockton.

Dianne Feinstein

2:44:06 to 2:44:18( Edit History Discussion )

Dianne Feinstein: number four, san bernardino. number five, sacramento. and number seven, bakersfield. and it just so happens that these are areas with a lot of middle-class, hard-working families who tend to trust

Dianne Feinstein

2:44:18 to 2:44:32( Edit History Discussion )

Dianne Feinstein: their broker. both people in the family work. they may not all be college grad wassments they may have a tough time understandingdi -- they may not all be college graduates. they may have a tough

Dianne Feinstein

2:44:32 to 2:44:47( Edit History Discussion )

Dianne Feinstein: time understanding what the fine print is. and they depend on the person that comes to them as a professional and makes personal representations to them. so my state accounts for more than 20% of the nation's

Dianne Feinstein

2:44:47 to 2:45:18( Edit History Discussion )

Dianne Feinstein: foreclosure filingse . it's a very serious thing. and we've now learned how easy it is for anyone to get intoet the mortgage business in some statess states. and quite frankly, it's astoni shing. a

Dianne Feinstein

2:45:18 to 2:45:41( Edit History Discussion )

Dianne Feinstein: simple internet search will show how easy it is.~ now these are statements taken right off the internet for a broker. here is the source -- http.www. http.www..cflicense.com. here's what they advertised.

Dianne Feinstein

2:45:41 to 2:45:58( Edit History Discussion )

Dianne Feinstein: no experience, education or exam is necessary to sell subprime mortgages in the state of california. and here's also what they learned. quote -- "you can hire unlicensed sales agents to originate loans under

Dianne Feinstein

2:45:58 to 2:46:14( Edit History Discussion )

Dianne Feinstein: your company license." and in fact a lot of the real estate industry is opposed to mortgage licensing. they want to be able to do that, but what our job is to decide is this in the best interest of the

Dianne Feinstein

2:46:14 to 2:46:34( Edit History Discussion )

Dianne Feinstein: consumer. and i don't believe it is. as a matter of fact, i find it rather outrageous. and i say to the real estate industry, this does you no good to have unlicensed subprime mortgage brokers who

Dianne Feinstein

2:46:34 to 2:46:51( Edit History Discussion )

Dianne Feinstein: give bogus information to your clients. so here's whatha this bipartisan amendment would do. first, it would establish some minimum basic federal license requirements, and they would ensure that mortgage

Dianne Feinstein

2:46:51 to 2:47:08( Edit History Discussion )

Dianne Feinstein: brokers and lenders are trained in ethics, consumer protection, lending laws, and the subprime marketplace. to be licensed, you would have to have no felony convictions, have no similar license

Dianne Feinstein

2:47:08 to 2:47:25( Edit History Discussion )

Dianne Feinstein: revoked, demonstrate a record of financial responsibility, successfully complete educational requirements, at least 20 hours of approved courses. it seems to me that's pretty basic, and pass a comprehensive

Dianne Feinstein

2:47:25 to 2:47:44( Edit History Discussion )

Dianne Feinstein: written exam and meet an annual license review and renewal requirement. it would also require thatha all mortgage brokers and lenders provide fingerprints, a summary of work experience and cieonsent to a background

Dianne Feinstein

2:47:44 to 2:48:01( Edit History Discussion )

Dianne Feinstein: check to authorities. the bill would also establish a national databaseas so that individuals buying a home who wanted toed use a subprime mortgage broker could go up on the internet and find out if that

Dianne Feinstein

2:48:01 to 2:48:17( Edit History Discussion )

Dianne Feinstein: broker is in fact licensed. now the state would have the responsibility to carry out these minimum standar mds and could add any standards they wished, but ste regulators would be required to develop a satisfactory

Dianne Feinstein

2:48:17 to 2:48:34( Edit History Discussion )

Dianne Feinstein: licensing system within one year following the enactment of this legislation. if this doesn't occur, the housing and urban development secretary is empowered to quickly develop the national database

Dianne Feinstein

2:48:34 to 2:48:47( Edit History Discussion )

Dianne Feinstein: and license generating revenue for its implementation through fees to licensed applicants. now there's broad bipartisan support for this. our amendment is similar to a provision authored by representative

Dianne Feinstein

2:48:47 to 2:49:04( Edit History Discussion )

Dianne Feinstein: spencer baucus, a republican from alabama, the ranking member of the house committee on financialal services. the national licensing concept for mortgage lenders and brokers was included in the comprehensive

Dianne Feinstein

2:49:04 to 2:49:20( Edit History Discussion )

Dianne Feinstein: mortgage reform bill which passed the house in november. and last month the president's working group on financial markets recommended a similar proposal in their report on the housing crisis. now let

Dianne Feinstein

2:49:20 to 2:49:38( Edit History Discussion )

Dianne Feinstein: me conclude. the emergence in recent years of subprime and other exotic mortgage products have put many american h ome buyers at great financial risk, and many of these products require little

Dianne Feinstein

2:49:38 to 2:49:52( Edit History Discussion )

Dianne Feinstein: or no down payment. p they allow people with bad credit to get in over their head. they don't verify their wages. many have exaggerated wages on the loan documents. and m ost lenders and brokers offered

Dianne Feinstein

2:49:52 to 2:50:14( Edit History Discussion )

Dianne Feinstein: these mortgages, though, in a responsible fashion, but many others use predatory tactics such as failing to disclose the full risk in order toto place unsuspecting borrowers into mortgages they could

Dianne Feinstein

2:50:14 to 2:50:29( Edit History Discussion )

Dianne Feinstein: not afford. madam president, my heart broke when i met the simmons family. when i think of somebody s working for 20 years for a defense firm in california, his wife working for 26 years as a checker in

Dianne Feinstein

2:50:29 to 2:50:44( Edit History Discussion )

Dianne Feinstein: a super market so they could buy and sustain a home, which as you can see, they have kept in pristine condition. having a health problem, namely, a stroke, by mr. simmons, it's difficult for him to get

Dianne Feinstein

2:50:44 to 2:50:55( Edit History Discussion )

Dianne Feinstein: around. it's difficult for him to speak, costing them extra. using the home as a basis to try to refinance to take some money out of this house to pay for medical bills. and what's happening now? a

Dianne Feinstein

2:50:55 to 2:51:09( Edit History Discussion )

Dianne Feinstein: bad actor god hold of them. they didn't realize -- a bad actor got hold of them. they didn't realize what they were getting into. he promised certain things which didn't come through. and now this

2:51:09 to 2:51:26( Edit History Discussion )

couple faces losing their home. well, fortunately, we were able to hook them up last week with a community pro bono law firm that will now represent them and deal with their mortgage company and

Dianne Feinstein

2:51:26 to 2:51:41( Edit History Discussion )

Dianne Feinstein: try to see that they can recondition some of this loan back to what they were promised. but this is going on, and it's going on all over california. and the areas i just pointed out to you, the four

Dianne Feinstein

2:51:41 to 2:51:58( Edit History Discussion )

Dianne Feinstein: out of the ten highest areas, aren't the most affluent places in my state. they're places where families just like this have heard the rhetoric, "we can put you into the american dream. we can enable

Dianne Feinstein

2:51:58 to 2:52:14( Edit History Discussion )

Dianne Feinstein: you to buy a home. and here i, the mortgage broker, am willing to sit down and make you all these commitments." and then they find out the commitments are ashes. this has got to stop. there is no

Dianne Feinstein

2:52:14 to 2:52:27( Edit History Discussion )

Dianne Feinstein: place for the predator in this industry. you know, i know there's a bank, citi bank has told me they oppose the legislation.. i say to citibank, are you proud of this? is this the way you want to

Dianne Feinstein

2:52:27 to 2:52:44( Edit History Discussion )

Dianne Feinstein: do business? and i say to realtors who don't want these brokers to bers licensed, is t hat the way you want to do business? well, if it is, i'm against what you want. and i hope this passes. it's

Dianne Feinstein

2:52:44 to 2:53:01( Edit History Discussion )

Dianne Feinstein: been talked about. it's been dealt within a general -- in general terms, in a past bill that passed the house. the president's working group said we should consider it. we now have the chance to do it.

Dianne Feinstein

2:53:01 to 2:53:14( Edit History Discussion )

Dianne Feinstein: we face two million additional foreclosures, and we have to do something ab out fred torry lenders and brokers. and this -- about predatory lenders and brokers. and this amendment makes a beginning. mr. durbin:

Dianne Feinstein

2:53:14 to 2:53:35( Edit History Discussion )

Dianne Feinstein: i'm happy to be a cosponsor of her amendment. the last point she made is the one that i find almost nothing short of amazing, that the largest banks who are involved in the mortgage business and

Richard Durbin

2:53:35 to 2:53:48( Edit History Discussion )

Richard Durbin: that the realtors whoor are involved obviously in these transactions are resifting your amendment that would put some basic standards for the licensure of mortgage brokers? i continue to wonder why

Richard Durbin

2:53:35 to 2:55:07( Edit History Discussion )
Speech By: Richard Durbin

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