The notice should list the various workout options available.
These options have been accepted by Fannie Mae, Freddie Mac, and the FHA as appropriate loss management tools in the industry. Lenders should also be required to attempt to avoid foreclosure through various loan workout mechanisms. Further, a lender should not be permitted to unreasonably reject a workout proposal and simply proceed to foreclosure. Expansion and Extension of the Community Reinvestment Act The CRA should be expanded so that all mortgages made by a bank, as well as its subsidiaries and affiliates, are considered when a CRA rating is determined. Similarly, HMDA should provide better 338 information about ail mortgage loans made by financial institutions, including information about rates, points and fees charged, refinancings and foreclosures.
Loans with prepayments penalties and other abusive terms.
Loans in which the lender financed, directly or indirectly, any credit life, credit disability, credit unemployment or credit property insurance, or any other life or health insurance, or any payments financed by the lender directly or indirectly for any debt cancellation or suspension agreement or contract, except insurance premiums or debt cancellation or suspension fees calculated and paid on a monthly basis shall not be considered financed by the lender. Loans which contain a mandatory arbitration clause that limits in any way the right of the borrower to seek relief through the judicial process for any and all claims and defenses the borrower may have against the lender, broker, or other party involved in the loan transaction. Increased Data Collection is Critical - the Home Mortgage Disclosure Act should cover all Mortgage Loans 45 Points and fees must be defined as: (a) all items listed in 15 U. Total loan amount means the principal of the loan minus the points and fees. FENDLY, CMC Immediate Past President, National Association of Mortgage Brokers July 27, 2001 Mr.
We appreciate the opportunity to address you today on the subject of abusive mortgage lending practices. NAMB currently has over 12,000 members and 41 affiliated State associations na- tionwide. NAMB provides education, certification, industry representation, and pub- lications for the mortgage broker industry. NAMB members subscribe to a strict code of ethics and a set of best business practices that promote integrity, confiden- tiality, and above all, the highest levels of professional service to the consumer. In these hearings, the Committee will hear a number of individual stories as well as comments from advocates about some egregious, and in our view inexcusable, mortgage lending practices. You will also hear from others in the mortgage industry about possible solutions, which NAMB supports and is actively involved in devel- oping.
My testimony today will briefly outline some of these. But I would like to focus this testimony on helping the Committee understand the important and unique role of mortgage brokers in the mortgage marketplace, and offer the unique perspective of mortgage brokers in examining the problem of predatory lending.
Today, our Nation enjoys an all-time record rate of homeownership.
While many factors have contributed to this record of success, one of the principal factors has been the rise of wholesale lending through mortgage brokers. Mortgage brokers have brought consumers more choices and diversity in loan programs and products than they can obtain from a branch office of even the largest national retail lender. Brokers also offer consumers superior expertise and assistance in getting through the tedious and complicated loan process, often finding loans Kansas online payday loans Kansas online payday loans for borrowers that may have been turned down by other lenders. Today, mortgage brokers originate more than 60 percent of all residential mortgages in America. The rise of the mortgage broker has been accompanied by a decline in mortgage interest rates and closing costs, an increase in the homeownership rate, and an explosion in the number of mortgage products available to consumers. These positive developments are not mere coincidences. They would not have been possible without the advent of wholesale lending through mortgage brokers. Mortgage brokers now have an extremely important role in our economy. But they can usually find a mortgage broker right in their community that gives them access to hundreds of loan programs.
Mortgage brokers are generally small business people who know their neighbors, build their businesses through referrals from satisfied customers, and succeed by becoming active members of their communities. The recent expansion in subprime lending, which has been noted by the Com- mittee in these hearings and others, has also relied heavily on mortgage brokers. Mortgage brokers originate about half of all subprime loans. Many mortgage brokers are specialists in finding loans for people who have been turned down by other lend- ers.
These are hard-working people who, for one reason or many Kansas online payday loans reasons, do not fit the profile that major lenders prefer for their customers. Some lenders just do not want to be bothered with such customers that take a little more time and effort to qualify.
Some do not want to accept the risk of lending to someone who may have had a bankruptcy, an uneven employment history, or a problem with a previous creditor.
Mortgage brokers can usually find a loan for someone who has been turned down by others.
Most mortgage brokers who originate subprime loans do so primarily be- cause they enjoy helping people. Certainly these loans can be profitable, and bor- rowers do pay higher rates Kansas online payday loans and fees because of the increased risk, but subprime loans are also time-consuming and often very difficult to arrange.