Senate Banking Committee Chairman Christopher J. Dodd, D-Conn., has revealed that he is working on a comprehensive predatory-lending bill that would prohibit lenders from steering borrowers into subprime loans and impose a fiduciary duty on mortgage brokers.The bill also holds lenders who pay brokers a yield-spread premium responsible for the brokers' actions. "Predatory lending needs to be stopped, which is why I intend to introduce legislation that will put an end to the practices that have forced thousands of Americans into foreclosure," said Sen. Dodd, who is seeking the Democratic presidential nomination. The Dodd bill would include YSPs in the points-and-fees test for determining whether a loan is a "high-cost loan" under the Home Ownership and Equity Protection Act. It would also prohibit prepayment penalties on subprime loans and require escrow accounts. The senator's bill also addresses servicing abuses.
