House Advances Three Bipartisan Bills

April 7, 2005

On Thursday April 6th, under suspension of the rules, the House passed the following legislation that will then be sent to the Senate for further consideration:

H.R. 1025, the Mortgage Servicing Clarification Act: sponsored by Rep. Edward R. Royce (CA), the legislation would amend the Fair Debt Collection Practice Act (FDCPA) by creating a narrow exemption from mandatory debt collection disclosures for servicers of first lien mortgages.

Currently, when a mortgage servicing company acquires the rights to service a portfolio of home loans, a small percentage of the loans will inevitably be delinquent or in default at the time of transfer. Under the FDCPA, mortgage servicers are required to provide Miranda notice to their new customers. This notice is required when the servicer makes initial contact with the customer and is often included in a new client's welcome letter.

These notices often mislead borrowers, confusing them about the nature of the relationship with their new servicers. The harshly worded notices can have an unintended consequence of discouraging borrowers from contacting their new service providers.

Rep. Royce said, "Under current law, mortgage services are forced to start off their relationship with some new customers on a bad note. The goal is to get borrowers who are late on payments back on track, not to discourage them from working with their new service providers. This legislation clarifies the law allowing for a more constructive relationship between homeowners and mortgage servicers."

Legislation similar to H.R 1025 has been approved by the House in the past two Congresses.

H.R. 436, the Increased Capital Access for Growing Business Act: sponsored by Oversight and Investigations Subcommittee Chairwoman and Committee Vice Chairwoman Sue W. Kelly (NY), the legislation would encourage the growth of small businesses by modernizing the rules that govern business development companies (BDCs).

BDCs are closed-end investment companies that are required to invest most of their assets in eligible portfolio companies. H.R. 436 would amend the definition of an eligible portfolio company so that BDCs have more flexibility in selecting investments.

Rep. Kelly said, “Small and developing businesses should be able to devote their energies toward their customers and growing their business, not worrying about access to capital. By enabling business development companies to provide financing to additional small-and medium-sized businesses, the economy can experience greater growth and job creation.”

H.R. 436 is similar to language which passed the House by voice vote in the 108th Congress.

H.R. 797, the Native American Housing Enhancement Act of 2005: sponsored by Rep. Rick Renzi (AZ), the legislation would assist in stretching existing resources to American Indians and Alaska Natives by amending the Housing Act of 1949 to state that federally recognized Indian tribes who exercise powers of self-government shall comply with the Indian Civil Rights Act if they receive financial assistance from the Agriculture Department for farm housing.

Additionally, the bill would make Indian tribes or their housing entities eligible for YouthBuild grants.

“This bill will help give Native Americans in rural Arizona, and across the nation, the tools they need to better utilize federal housing programs and plan for the future,” said Rep. Renzi. “I am especially pleased to see the YouthBuild program reinstituted to help teach life skills to at-risk youth. This program not only provides these young people with an opportunity to improve themselves, it allows them to assist their communities by building new housing for needy families.”

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