The impact of these interrelated problems on both Kansas installment loans borrowers and our entire economy is now being felt. My remarks today will focus on the national crisis in subprime mortgage lending foreclosures.
Now, you know, look, we strongly believe that responsible subprime lending does serve a valuable and necessary role in cre- ating opportunities for people who might otherwise never own a home or who wish to use their homes as collateral for important 16 economic needs.
The basic problem we face today, though, is that the responsible part of responsible subprime lending has given way to a high-risk profit motive that jeopardizes the future of some of the most vulnerable members of our communities and our constitu- encies. In recent years, we have witnessed an explosion in the abuse of legitimate but risky mortgage products, such as the so-called 228 loan, and rapid abandonment of the use of sensible lending prac- tices. As we are now learning, when unsafe or predatory loans are made on a widespread basis in a volatile housing market where supply far exceeds demand, yet where prices have been driven up to unsustainable levels through widespread speculation and fraud- ulent appraisal practices, you have a meltdown just waiting to hap- pen. Now, of course, we still have yet to determine the full impact of the current crisis. So far, one thing is clear: the number of fore- closures on subprime mortgages has been rising fast and will al- most certainly keep rising. The Center for Responsible Lending, a member of the Leadership Conference which we will hear from today, suggests that perhaps as many as 2. If that happened, we indeed have not just a crisis but an absolute disaster. The Leadership Conference is particularly concerned about rising foreclosures among African Americans, Latinos, and low-income households. I will not go through the specific disparities between African Americans, Latinos, and white borrowers. But I think it is very clear there is clearly a racial disparity, one that seems to suggest individuals are being steered into subprime loans who happen to be African Amer- ican and Latino. And while we remember here that not all subprime loans are predatory, it is evident that race or ethnicity of borrower — factors that should never play a role in lending deci- sions — frequently determine the cost of a mortgage loan. And as foreclosures continue to increase, minority communities are likely to be hit especially hard as a result. Now, how the growth of subprime foreclosures will affect the economy at large is still difficult to predict. It is tempting to point fingers and lay blame to a now disastrous situation. Depending upon whom you ask, mortgage lenders blame brokers, brokers blame appraisers, appraisers blame realtors, real- tors blame developers, and borrowers blame all of the above. But, of course, it does not help that our society is virtually hooked on 17 easy access to credit and that people hoped, basic laws of economics notwithstanding, that the good times of the housing boom would last forever. Ultimately, we believe that the blame should not be laid on any one group or sector, but on the fact that the entire subprime mort- gage lending Idaho signature loans system, as we currently know it, is broken. The legal and regulatory structure that governs mortgage lending has simply failed to adapt to the widespread changes that have taken place in the subprime market in recent years. Now, I am encouraged that many stakeholders Chairman SCHUMER. I will wrap up — have begun to do voluntary ef- forts, but let me make one last point, and that is particularly clear. We at the Leadership Conference are encouraging lenders to take another very important voluntary step, and that is, an immediate, though temporary, moratorium on all Kansas installment loans Kansas installment loans foreclosures on subprime mortgages that include payment shock provisions. That would allow lenders to work with deserving homeowners to help them keep their homes by putting them on more sensible loans. Now, obviously some borrowers use subprime loans hoping to simply get rich during the real estate boom, but a moratorium, a temporary moratorium, is vital to finding and helping borrowers who truly deserve relief. We in the civil rights com- munity are proud to be associated with its introduction.
HUMMEL, SENIOR VICE PRESIDENT AND CHIEF Kansas installment loans APPRAISER, FORSYTHE APPRAISALS, LLC, ON BEHALF OF THE APPRAISAL INSTITUTE Mr.
The current mortgage crisis with prop- erty flipping, fraud, foreclosures, inappropriate pressure, and bad consumer advice is sending shock waves through our communities and our economy.
Because honest appraisals and fair dealings are essential for the legitimate mortgage process, effective reform demands that pres- sure on appraisers to report predetermined values must stop. Much of the problem comes from the way that the real estate financing industry is structured. Well-regulated finan- cial institutions perform pretty well. Playing by the rules, legitimate sectors in the mortgage industry compete with the free hooters cutting corners. Despite decades of effort, pressure on appraisers has doubled since 2005. Too often, appraisers feel pressure to doctor their valuations so that deals can go through.
I have been threatened to be blacklisted if I did not remove certain information from appraisal reports that I felt was necessary to produce credible, important facts for secure and fair lending decisions to be made. Recently, a broker client e-mailed me and complained that I had mentioned a rotting porch in a particular property that I appraised. The house had numerous problems, and they had focused on the fact that within the appraisal report, we had taken a picture of where we had actually stepped through the floor loans for bad credit in Ohio of this porch. We took a picture of the hole, showing the rotting that was going on in this house.