As stated in our Ethical Guidelines that are attached to our written testimony, we also support voluntary and other means of prohibiting some abu- sive practices. We are pleased that the State legislatures are recognizing the importance of this issue and passing Statewide legislation to com- bat predatory practices in our communities. Is your concern about SPCLI related to the product or the marketing of the product? Both — the product is unnecessarily expensive, and in some cases it is included without any disclosure to the borrower.
If SPCLI is removed from the marketplace, what are subprime borrowers to do when they wish to insure their financial obliga- tions, and monthly alternatives have not been approved in their States? One witness said that if you go to a Monthly Out- standing Balance basis, it is more expensive that over the term of 439 the loan.
It would seem that the witness arguing that single-premium credit life is cheaper than the monthly alternative was in error. I have heard that SPCLI is a better deal for consumers over 41 years of age because it is cheaper and it is generally more avail- bad credit installment loans Wyoming able that the traditional term life insurance.
If that is true, then the consumer, with a little knowledge and perhaps disclosure, would seem to have a viable alternative, but this does not indicate if SPCLI for those over 41 years of age is cheaper than the monthly alternative, which is always a better deal for the consumer. Many of these companies also provide additional real estate information services, such as tax search, flood certification, tax filing, and credit reporting services. These firms and individuals employ nearly 100,000 individuals and operate in every county in the country. Predatory lending practices can be a source of substantial claims loss to title insurers.
We recognize that there is a fine line between subprime and predatory lending. We hope that the Congress, the agencies, and the lending industry develop a fair, reasonable, solution to these problems. Because we are clearly not central to the lending decisions, and only see the results of these loans at closing, or in limited situations, where claims arise, we are limiting our comments to those provisions of S. The concerns raised about predatory lending practices have related to refi- nance and second mortgage transactions. There is simply no reason to extend HOEPA to potentially millions of purchase money mortgage transactions in which there has been no evidence of the kind of abuses to which HOEPA is addressed. Second, the bill eliminates a current provision of HOEPA that we believe should be retained. Some ALTA members do engage in independent operations, and participate in affili- ated business arrangements, and we do recognize the policy rationale behind the in- clusion of affiliated business arrangement fees under current law. We hope that the Committee keeps in mind that title insurance fees are regulated in most States, and that these fees are loans for bad credit in Virginia based on costs and risk, and that adherence is required to ensure solvency and consumer protection.
In fact, the rationale for maintaining the current language is even stronger in light of the other changes made to HOEPA by S. Indeed, by reducing the trigger amount and eliminating that exclusion, S. This prospect could adversely affect the availability of financ- ing to higher-risk borrowers. The new provision would prohibit a creditor, in connection with a HOEPA-covered mortgage loan, from charging a borrower for credit insurance or a debt cancellation contract on a single premium basis through an upfront charge paid by the borrower at the outset of the loan. We express no views on whether such a prohibition loans for bad credit in Virginia is desirable or appropriate. The language is unnecessary because the provision, without the additional words, would still prohibit lenders from collecting single premiums for credit insurance. Our members are involved in the closing of mortgage loans. Neither TILA, nor indeed other comparable consumer protection statutes, have sought to impose such obligations on third parties, and Congress should not start loans for bad credit in Virginia down that road in this bill. In addi- tion, in many instances, there may not be enough detail for a closing agent to deter- mine that there is a single-premium credit insurance premium. We thank the Chairman and the Committee for the opportunity to submit this statement. STATEMENT OF THE CONSUMER RAN KE RS ASSOCIATION July 27, 2001 The Consumer Bankers Association (CBA) is pleased to submit this testimony to the Committee on Banking, Housing, and Urban Affairs of the U. It provides leadership and representation on retail banking issues such as privacy, fair lending, and consumer protection legislation and regulation. Member institutions are the leaders in consumer home equity fi- nance, electronic retail delivery systems, bank sales of investment products, small business services, and community development. Our membership actively participates in the nonprime lending in- dustry in the United States. We are proud of the role our members have played in expanding the availability of mortgage credit to borrowers not qualified for conven- tional mortgage financing due to little or poor credit experience.
We appreciate the opportunity to share with this Committee the position of our members personal loans for bad credit Washington State with respect to the complex issues and challenges facing the mortgage lending industry. We are hopeful that the spotlight this Committee is placing on these issues will be helpful to our membership as they seek to continue to expand home ownership opportunities through fair and nondiscriminatory lending practices. This access to credit is instrumental to helping borrowers purchase and improve their homes, access equity for emergencies, and obtain basic goods and services. Nonprime lending is generally described as the extension of credit to borrowers exhibiting higher delinquency or default characteristics than those of traditional borrowers. Department of Housing and Urban Development and the U.
Department of Treasury reports that nonprime mortgages were five times more likely to be delinquent than prime mortgages. In the last decade, lower-income and minority loans for bad credit in Virginia consumers, who historically had dif- ficulty in getting mortgage credit, have been granted loans at unprecedented levels. Indeed, Federal Reserve Governor Gramlich recently observed that conventional home mortgage lending to low income borrowers between 1993 loans for bad credit in Virginia and 1998 increased nearly 75 percent, compared with a 52 percent increase for upper income borrowers. At the same time, conventional home mortgage lending to African-Americans in- creased 95 percent, and to Hispanics 78 percent, compared to a 40 percent increase overall.
Department of Housing and Urban Development and the U. Department of Treasury indicate that the number of nonprime loans has gone from 80,000 in 1993 to 790,000 in 1998, an 880 percent increase. Litan, Vice President and Director, Economic Studies Program, The Brookings Institution, A Prudent Approach to Preventing Predatory Lending, February 2001, at 9. Gramlich, Governor, The Federal Reserve Board, before the Fed- eral Reserve Bank of Philadelphia, Community and Consumer Affairs Department Conference on Predatory Lending, December 6, 2000. Our members are greatly concerned about the harm this causes to consumers. Thus, CBA joins this Committee in condemning these abusive sales practices and in seeking effective solutions.