The House Financial Services Committee, after a day-long hearing Tuesday, passed proposed legislation by a 45-19 margin that would institute sweeping reform across the mortgage banking industry. The Mortgage Reform and Anti-Predatory Lending Act of 2007, introduced by Reps. Brad Miller (D-NC), Mel Watt (D-NC) and Barney Frank (D-MA), would establish federal licensing standards for mortgage brokers and bank loan officers, as well as introducing some liability for issuers in the secondary market for mortgage-backed securities. The bill would also establish foreclosure protections for leaseholders when a property owner defaults (read more coverage about the proposed bill by clicking here). From MarketWatch:

The measure won support from the committee’s top Republican, Spencer Bachus of Alabama, on Monday. Bachus said it has significant safeguards against abusive lending and beefs up consumer protection. “Whether you took out a subprime loan or not, you suffered from the subprime crisis,” Bachus said Tuesday, citing the steep decline in the housing market and the fallout in financial markets. Members debated the bill during an all-day session on Tuesday. Rep. Jeb Hensarling, R-Texas, took exception to the bill’s provision about proving a borrower’s ability to pay a loan, saying consumers should be able to choose their financial transactions. “Who are we to say no?” asked Hensarling.

The bill now heads to the full House for a vote, and awaits Senate action. It’s been suggested in the media and by sources that spoke with HW that a modified form of this bill could pass the House before the Thanksgiving. The full committee markup surrounding H.R. 3915 and related proposed housing legislation is available here, for those that are interested.