>> we take you to a voirs subcommittee hearing. this morning looking at oversight on home loan practices afekting military veterans. ive coverage here on c-span. the s also the assets of

taxpayer. we have a duty to make sure that the program is set up. properly and there isn't -- forgetting the term. there is a moral liability, ere's a lack of -- moral hazard here because the risk has been reduced greatly on a person benefiting from the decision. hope, mr. chairman, we can hold hearings in another area and that's in our educational benefits. i'm disturbed that in another committee form there is a proposal to do completely away educational allow institutions to take 100%, 100% of their revenue from the federal government. including federally backed student loans. i hope we could devil into that

area. i want to ask this question of -- delve into that area. i want to ask this question of -- can't see the name. the guy at the end. mr. cooper, as we approach this, i want to be careful, any action we take does not have any unforeseen consequences. one proposal that's been discussed is capping lender fees and tying the cap to the benefit of the loan for the veteran. so that the lender would not be able to collect fees in excess of what the veteran saves over a period of time. now, would such a proposal or others like it to cap origination fees somehow help this problem of loan train? or do you think as long as there are any fees permitted, lenders will still seek to charge? mr. cooper: thank you for the question. i believe personally there are already restrictions in place in the amount of fees that can be

charged. the difficulty becomes, when you are buying down interest rate, and for discount points, that can then be rolled into the loan. those things are becoming -- become another disclosure issue. how far down did your break go when you purchased these points, so to speak. so i think it does fall in line with the other pieces that we talked about already. there may be other ways to handle it. i don't know specifics of what the caps might look like in addition to what's already there. but it could be one solution. . . at that cana: -- mr. takano: have there been provisions to define predatory behavior? have they been fined? >> we do have some -- civil

penalties we can apply. that's a reference -- lenders ho actually try to defraud the veteran or to mislead the government through forgery. mr. london: it's very specific. mr. takano: very specific. ask about ginnie mae be able to handle this? >> we do have a decent amount of authority at ginnie mae in terms of policing access to our security. that's authority we have been using and are going to continue in the next weeks to expand. mr. takano: can you tell me whether or not you have actually fined companies for -- mr. bright: we have fined companies for violation of our program. mr. takano: do you publish the names of those companies that you have fined? mr. bright: no. mr. at thatian clow: why not -- mr. at that dano: --

mr. takano: why not? mr. bright: i don't know. mr. takano: mr. london, would this sort of authority be useful to the d.a. if we were able to provide that authority? mr. london: technical assistance for any type of legislation that you think may be helpful in this regard. we're ready to assist you. mr. takano: i would be interested in meeting with both of you off line and discuss this matter further. >> thank you, mr. takano. yet another gentleman from california, mr. correa, five minutes. mr. correa: thank you, mr. chairman. for having this most important hearing. i thank the folks here as well. it's a little bit about my background, licensed realtor. former loan broker. and, gentlemen, as you know this can be one of the dirtiest businesses there is out there. real estate. real estate loans. mr. cooper, have you had to fire anybody?

mr. cooper: i have not personally had to fire anyone, no. mr. correa: that's impressive. most of the time there are a lot of bad apples out there. you end up firing folks because sometimes it doesn't matter what your mission statement is, the interest of making a buck sometimes outweighs the interest of following your mission statement. in reference to what my colleague, mr. takano, put up do you put this online? the state of california, if you have a doctor that is civilly fined, that goes online. the bureau of automotive repairs, any violations go online. so you as a consumer have any issues, you immediately go online, see who the heck it is you are dealing with, and that information is disclosed to the world. it's not rocket science, folks. we can do this very easy. it's very hard also to try to

second-guess the economic motives for a veteran to refinance. buydowns, interest loan, fees, points. as you know, sir, sometimes with these folks, they'll difficult you discount on the points but jack you up on the fees. at the end of the day you get hit one way or the other. it would be interesting if we come up with not rocket science, but an application, an app somewhere so a veteran, consumer, can punch in a couple of numbers and come up with this is good or bad. another question i have, mr. london, do you keep records of the folks, the loan originators, and how many loans that they are originating so that you can detect where there is a pattern there of churning or not? mr. london: we do keep a record of every loan that is originated. i'm glad you asked that question. thank you for asking. because one of the things that mr. cooper mentioned was that we

have on the back end, if you will, for servicing of loans, when a veteran goes into default, we have a comprehensive system where every single defaulted loan we have tremendous amounts of data so we can see exactly what the servicer is doing and we can intervene on a veteran's behalf if we need to. unfortunately, we don't have a system like that on the front end. however, we have recently let a contract where we're building -- re-engineering the entire system i just described and building the capability on the front end to get information on every single loan origination that has the same type of intervention and monitoring we have in servicing a loan. we're very close to having that. mr. correa: i'm happy to hear that. i hope you put as much of that information on line and direct our veterans to that website so they can be a better educated consumer. good faith estimates, don't we still have those out there that when you originate a loan you get people something that says what this loan's going to cost?

do we still have that? mr. london: the borrower will get a loan estimate. with that type of information. mr. correa: again, i hope that you keep some kind of database, work on it up front, so that if any of these folks are out there originating loans, you can see a pattern. every two or three months they are churning a loan, if you can look at it then, whether they are doing it for their own benefit or the consumer actually benefits. . >> thank you. i yield myself another five minutes. i think this has already proved to be a very productive discussion. i think we should continue it. most of my thoughts and comments and questions were philosophical. i truly believe that choice for the consumer and disclosure is

generally the best way to regulate. again, mr. takano articulated it better than i could. argearge the market is skew -- mr. arrington: the market is skewed. there wouldn't be this market. presumably because we wouldn't do it. now becomes the question, we should regulate and engage more readily on behalf of the taxpayer and certainly if there are ways to have better disclosure and a simpler, easier way to digest what product and transaction they are about to engage in, by all means, i'm hoping you guys are reviewing that and constantly thinking of ways to do that. although oftentimes more regulation to protect the consumer ends up with more paperwork for the consumer and i think makes it more difficult and burdensome. but i would like to see that new disclosure product you guys

are working on, and as the ranking member suggested, if y'all could submit that, it would be good for us to look at it. but trying to regulate in this space a way those products that we deem bad for the veteran because they're churning, because of some definition that agree is bad, versus -- and doing that without diminishing the opportunity for products that they may need, real products that are good, safe, sound, useful for the veteran so they can maybe lower their payments. maybe they know exactly what they're doing and they need that. help me, mr. motley, mr. cooper, tell me where the line is, where it's a good product, it's useful, it's safe, it's

sound. there is always a transaction cost for the institution. if there's more risk, then the institution has to charge commensurate with the risk. we see that in payday loans all the time. i know folks couldn't fix their car and get a loan again because the bank won't finance them. so anyway, what are your thoughts about the line between the appropriate and sound the not so sound churning, where is that, define that for me? >> well, it's not that easy to define. i think as mr. cooper said earlier, we try to look at all of our borrowers in terms of what's best for them. mr. motley: what's the best outcome for them, for their particular situation. you have to take a lot of things into account. and so i think you want to have guardrails put in place on any program to avoid abuse and you want to have transparency so

your point about proper disclosure is a good one. and having it done upfront is also a very good one. but i think we have to balance additional regulation with the benefit of that and the onerousness and extra cost of providing additional disclosures. but i think the main point is is if we're sure that the veteran is benefiting from the refinanced transaction, and we can do that by showing what the costs are, payment reductions are, how long it will take them to break even on that transaction and if that makes sense in his situation, then we should have satisfied the net tangible benefit test and satisfy v.a. we've done the right thing for that veteran. mr. arrington: let's assume we can define a reasonable, useful, sound product or

transaction that allows the veteran to benefit. the cost are commensurate. they're built in. the fees are commensurate with the cost. so let's say we can define that. do you all, v.a. and ginnie mae, have the authority, legal authority to define that and regulate in this space in that regard? do you have the legal authority? and cite for me the legal authority. because here's my thing. i want you to appropriately, because of the taxpayer, and i think it is sometimes necessary and appropriate, but i don't want you to make it up. i don't want you to just create it out of the ether. and so if we as congress do need to act to give you that legal authority, that's the way this -- this thing works, as you know. so do you have the legal authority? cite the legal authority for me both ginnie mae.

mr. london: we have a draft regulation we believe is a measured approach to address this issue and the specific statutory authority that we used, there are several. is one.. 3710 specifically subsection e. u also have 3703-c, and 38 u.s.c. 501 are the three specific statutory references that we believe gives us the authority to regulate this issue. mr. arrington: summarize for me, if you would, what -- what that legal authority is if you can. i could go back and look it up and everybody here can but give me one of the three the best nexus to that authority from which you would promulgate a rule to define this net tangible benefit? mr. london: i'll be happy to provide you more detail for the record but the ones i will choose that gives the agency the broadest authority is 38 u.s.c. 501 and that specific reference gives the secretary the authority to regulate v.a.

programs across the board and the other two references i gave you were specific to the loan guarantee program. again, i will be happy to provide you those details. r. arrington: i have given you -- i have taken enough time. mr. ranking member. >> i think mr. motley gave a point ensuring we do the right thing for the consumer without overburdening the lender. i heard from many lenders in el paso about how really well-intended legislation to rein in the too-big-too-fail institutions inadvertently hurt the smaller independent originators. mr. o'rourke: and make a compelling case, we know the community best, beto. when you make it more expensive and harder for us to originate then those that don't know the community are left with those choices and you see less capital coming into the community. so your point is very well taken. i will say just in the example we discussed and that mr.

london has committed to in terms of prioritizing the net economic impact disclosure at the outset and the o'rourke addendum to that that it be in 16-point types that is easy to see and you know what you are getting into doesn't seem burdensome, onerous. seems very fair and very workable, again, from my perspective, not knowing y'all's business as well as you do. i hope that you could agree with that or that the industry would see that as well. but your point's well taken, we want to make sure we don't undermine the ability to get these loans made or these refinancing transactions completed for those who would - who would benefit from them. one of the last things, mr. chairman, we need to do is make sure we're hearing from veterans on these propes and the veterans organizations that advocate for them, i want to make sure there are no

additional suggestions or ideas or proposals that have gone unheard or unimplemented because in texas a loan -- we see just last year 60,000 total home loans, 21,000 of those were refinances. we want to make sure we are advocating and protecting those veterans who have done everything we've asked them to do and have earned this and that we're able to follow through on it. lastly, i want to say this, mr. london. you really are a breath of fresh air. i just left the g.a.o. high risk list roundtable about v.h.a. being able to implement corrections that will improve access to care. and some of the responses we got, well, we're going to have a conference call on this. you could see something later this year. some cases we've seen no progress on any of these. the fact you came to this meeting with action already

undertaken and specific proposals about what you're going to change. for example, moving up this information to the outset of the transaction instead of the moment when you sign and you're under all that pressure, very refreshing. i love seeing that and hope you will follow up on that by keeping us informed of your progress on implementing this. i think we all agree sooner better than later. would certainly love to hear back from the industry and most importanty veterans on the efficacy of those efforts. thank you all for what you're doing and your testimony today and i'll yield back to the chair. mr. arrington: mr. takano, five minutes. dr. -- excuse me -- r. london, and who's the guy

from the beginie mae, i canter -- ginnie mae, i can't remember your name. mr. bright. when we say ginnie mae is able to find companies in this space, is that space include the v.a.? understand that ginnie mae -- am i misunderstanding that v.a. and ginnie mae work in partnership and together to operate this program? mr. bright: so ginnie mae has the authority to issue rules that pertain to lenders' bility to access our security. so we have broad statutory authority to write rules to access our security as we need to protect it. if you look at the charter of our top five mandates, the first fewer four relate to making sure there is liquidity in the mortgage market and the ability to promulgate regulations to make sure liquidity maintains in the

mortgage market. once we issue rules to the issuers or lending community and say we have a rule to abide by, if there are violations of that guide, we can issue civil money penalties. our rulemaking ability is pretty much restricted to the ability to access a ginnie mae security. under what terms. we really can't issue civil money penalties for violations of the v.a. program itself. that would be v.a. nor can we issue civil money penalties for violation of consumer protection laws. that will be cfpb. what we have been doing in those cases when we think it's possible some of those laws are being violated we're making referrals to the relative agencies. they pertain to violations of the rules that we mutt in place for access to our security. mr. takano: mr. cooper, you said earlier that during the financial crisis overall the

v.a. home loans held up -- held up the best. to what do you attribute -- to what do you attribute to that? mr. cooper: thank you for the question. we attribute that to the underwriting that was in place from the v.a. from well before the crisis and specifically the way the v.a. looks at it is not just at how much -- what's their payment, what's their d.t.i., they are looking at the back end of like how much money do you have left over? the residual income. that's a really essential part of the program. residual income, it protects the person from, you know, at the end of the day, they still have money to live their daily life. then they're still able to -- hopefully they're able to make their mortgage payments. that has been a really big part

of the v.a. program that's different from any other program that's out there. no one else requires that. again, o: mr. london, as we look -- do you have any appropriate regulation or appropriate authority you might need to police the bad actors that we're talking about today more effectively? mr. london: sure. as i mentioned in my testimony, we have a draft regulation that we believe will take into account the very recommendations that you heard from other panelists today. we evaluated things like a net tangible benefit, requirements and recruitment requirements and many other actions to see what will best handle the issue. i definitely have to get one point on the table and all the

panelists agree that we're talking about a relatively small number. mr. takano: very small. i realize this. mr. london: that are involved in this. the fact that we drafted a rule very carefully that will not only impact those small actors, it will impact every single veteran's -- potentially access to his or her earned benefit. it will have an impact on every single lender or servicer that participates in the program. as mr. bright and others say, it will have a downstream effect on mortgage investors. so it's not just one answer or one thing that can be done. we looked at it holistically. as i said to the chairman, we believe we have the statutory authority to regulate in those areas. mr. takano: you haven't published it because it's a draft. is there a comment period from the public that has to be undergone before it's implemented? mr. london: as a proposed rule and there will be an opportunity for public comment.

mr. takano: and you don't have any idea -- you haven't taken input from the industry on crafting the rule? mr. london: absolutely. the good news is, in analyzing and thinking about the rule, we met, as i mentioned in my testimony, we met with the mortgage bankers association and their members and many other stakeholders as we were contemplating and evaluating what policy actions we needed to take under this draft regulation. obviously we will welcome additional comments that anyone has to offer once the rule is published. mr. takano: when do you anticipate the rule being published? mr. london: unfortunately i don't have a specific timeline for you today, but i am happy to report the rule is in final draft and that's a good indication we will make it publicized in a relatively short time frame but i don't have a specific time frame for you today. mr. takano: thank you very much. i yield back, mr. chairman. mr. arrington: no closing comments? mr. takano, i'll give you more

time if you have any follow-up time or comments. mr. takano: mr. chairman, thank you for the spirit of this hearing. i congratulate you on that and hope we can continue and i respect your free market -- i really respect your free market views. i do entertain the thought that some of these products could be useful to some veterans and we don't want to be overly aggressive in regulation. but, again, we're talking about taxpayer resources that we have to protect. mr. arrington: that's right. that's right. you know, it's good we can agree like this, huh? let's somebody get a picture. is this on -- is somebody recording this? it's true. this is a space where we need to engage on behalf of the taxpayer because of the full faith and credit and we need to strike that balance. that's why i asked the question of defining it. how do you define this because if somebody was charged any fee, they may say, hey, i shouldn't be charged for this,

but there is a cost for the institution for that transaction. so what is that threshold that's unreasonable and abusive and not tangible benefit? i feel like i heard enough to know the stakeholders, including the industry, can strike that and in fact have and i give you credit and join the ranking member in his praising you and your team for the way you conducted your business. it's best that a regulator engages the stakeholders prior to public comment. i mean, you're going to have agreement here, it seems like, and we are talking about a few potentially bad actors, potentially. maybe not bad actors. maybe they're just playing with the rules that exist. we just need to tighten them up so that we raise the barf what we expect for safe and sound practices and the protection, you will, and minimal

-- dards for fair practices raise the bar of what we expect for safe and sound practices and the protection, if you will, and minimal standards for fair practices. the f.t.c., have there been any cases referred to the f.t.c. where there's been unfair and deceptive and i understand there are lots of things going on here that could disclose better so let's do that? there is safety and soundness for the taxpayer and the ogram, but then there's real deception and unscrupulousness by offering one thing and it be really another thing. have those been referred to the f.t.c. and have they acted upon those, mr. london? mr. london: i am not personally aware of any referrals that have been made. mr. arrington: mr. bright. mr. bright: yeah. what we've been doing is collecting solicitation

materials that are generally from actually brokers, not lenders themselves. what they do is they originate these loans and sell them to a lender. what i'd love to do is we got a pile of them so i asked all the veterans at ginnie mae to sort of collect these solicitation materials they get. i will share them with you. they're not -- they're not lies. they're just -- you'll -- we'll sit down and talk to them. mr. arrington: yes, sir. i am trying to be real careful in this hearing to say predatory or deceptive because the f.t.c. ought to pursue that and bring the full force of the law against people that are doing that. and then where we need to tighten it up, where there are some fastness and looseness, that's what you guys can do. and then again for me ultimately the safety and soundness of the program, this is offered because the taxpayers allowed this to happen because they love their veterans and they want them to have this benefit.

but they want it done in a safe and sound and fiscally responsible way. >> -- mr. london: mr. chairman, can i amend my comment? we have been working very closely with the cfpb on veteran complaints that we have received about the solicitation that they received and we have made those referrals. i was wanting to make that distinction. we have made recommendations to the cfpb but not specifically to the f.t.c. mr. arrington: thank you. thank you, colleagues. great discussion. efforts inue in your as you described to tighten up in this space and let us see whatever draft documents just for our information, as the ranking member requested, if you would. and continue to notify us if

you need the authority where you don't and don't regulate where you don't have the authority, that's not your job. that's the united states congress job, article 1. but i feel good about what i heard today. and so good hearing. this now concludes our hearing and i ask unanimous consent that all members have five legislative days in which to revise and extend their remarks and include any extraneous material on today's hearing. without objection, so ordered. thank you, all, again, for being here today. great hearing. god bless. [captions copyright national cable satellite corp. 2018] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org]

>> and another retirement announcement on capitol hill today. congressman darrell issa is not seeking re-election when his term expires in 2018. he tweeted this out this morning. serving california 49 has been the privilege of a lifetime. from the bottom of my heart, thank you for everyone for your support and the honor of serving you all these years. he has been in congress since 2001 and at one point chaired the house oversight committee. the housist self will meet at noon -- the house itself will meet at noon eastern. they will take up a bill that includes provisions to let tribes limit labor union organizing. the same way local and state governments are allowed to under the now national labor relations act. the house will also begin work on continuing fisa, the foreign intelligence surveillance act for another six years. the final vote on that measure is anticipated tomorrow. meanwhile, president trump today meeting later with the norwegian prime minister at the

white house. the two will hold a joint news conference after that meeting and you can watch that live on expected. at 3:20 eastern. esday president trump will give his first state of the union address. with the preview of the address followed by the state of the union address at 9:00 and following the speech we'll take your calls. lso hear actions -- remarks by members of congress. it's on c-span, c-span.org and also on the free c-span radio app. >> the deadline for c-span's student cam video documentary competition is right around the corner. it's january 18. we're asking students to choose a provision of the u.s. video ution and make a why it's important to you. these students participated in a student cam film festival.

this group wrapped up an interview on climate change. and this student learning a lot and having fun while editing. our competition is open to all middle school and high school students grades six through 12. $100,000 will be awarded in cash prizes and the grand prize of $5,000 will go to the student or team with the best overall entry. for more information, go to our website, studentcam.org. >> and while we wait for the house to gavel in at noon eastern, a look at this morning's "washington journal." . host: our first guest, andrew seeley of the migration policy institute serves as the president to talk about refugees in the u.s. covered under the temporary protected status program. can you describe what this is. guest: this was set up