Scott Garrett: “Before I begin, let me just recognize and appreciate the work by the ranking member of the committee with regard to this…”

“Before I begin, let me just recognize and appreciate the work by the ranking member of the committee with regard to this overall underlying piece of legislation for his work to try to improve the legislation. I believe his actions have been done in view of his constituents and their concerns with the primary lending market as we see it today. Getting to the amendment that is before us, Mr. Chairman, the amendment would simply strike the rebuttable presumption paragraph under section 203 of the manager's amendment text. As currently drafted, section 203 of the bill specifically lists several criteria that lenders must meet when they originate a loan and that loan to be considered a qualified safe harbor mortgage. Qualified safe harbor mortgages are loans that: one, document consumer income; two, an underwriting process based on fully indexed rate; three, a debt-to-income ratio not greater than 50 percent; four, no negative amortization; and five, six payments for at least 7 years an adjustable rate loan with an APR that varies less than 3 percent over indexed rate. Now after meeting this prescriptive list of requirements, the loan can be considered a qualified safe harbor mortgage. It is presumed that the mortgage is an appropriate loan. However, section 203 also contains a provision that, even when all these provisions are met, would allow a borrower to rebut this presumption in a court of law and claim that the creditor has made a loan to them in bad faith anyway.”