MR. REED: Mr. President, today I introduce the Mortgage Disclosure Improvement Act of 2007. This bill will improve the loan disclosures given to homebuyers not only when they apply for a mortgage, but also when they refinance their home.

As we are all too aware, the percentage of loans entering foreclosure is at its highest level in 55 years. According to RealtyTrac, there were 1.2 million foreclosures reported nationwide last year, up 42 percent from 2005. Many of these Americans going into foreclosure took out exotic adjustable rate and payment option loans which are now resetting to new, much higher monthly payments. Many of these consumers never understood how these loan products worked or how high their payments would be once these loans reset.

The Mortgage Disclosure Improvement Act of 2007 would for the first time require that the maximum payment that a consumer has to make on a mortgage be disclosed, not only at application, but also seven days before closing. If these disclosures are not made or are made inaccurately, then lenders will be subject to statutory damages. In addition to requiring lenders to disclose the maximum payment under the loan, they will now have to provide consumers who apply for adjustable rate or variable payment loans with a warning that the payments will change, depending on the interest rate.

In addition, this bill would require lenders to give firm disclosure regarding the terms of the mortgage not only within three days of application for the loan, but also at least seven days before closing. Lenders also will now need to include a statement that the consumer is not obligated on the mortgage loan just because they have received the disclosures. This will give consumers the opportunity to truly shop around for the best mortgage terms for the first time ever. They will be able to compare the payments and costs associated with a certain loan product, and decide not to sign on the dotted line if they do not like the basic terms of the loan.

Finally, the bill clarifies that lenders are subject to statutory damages for violations of Truth in Lending disclosure provisions, increases the damages for mortgage violations from $2,000 to $5,000 per violation, and requires that mortgage disclosures be made within the stated time frames.

The increasing rate of foreclosures across the country is troubling. Not only are individual families losing their homes and their financial nest eggs, but there is a negative ripple effect across communities and the economy. Although improved TILA disclosures are only a small part of what Congress needs to do in the upcoming year, I believe that giving consumers the information they need regarding the maximum payments they might have to pay under the terms of a loan is an important and vital part of improving the process. Borrowers need to better understand the full financial impact of entering into a particular loan early in the loan decision process, and also before they actually consummate the loan. I hope my colleagues will join me in supporting this bill and other efforts to help improve the mortgage financing process.

Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.