For example, the borrower surveys conducted by the Federal Reserve Board revealed that over 20 per- cent of those surveyed contacted only one single source of credit. I already men- tioned that consumers do not understand the meaning and importance of the APR figure. Nor do mortgage shoppers entirely comprehend that the early Good Faith Es- timate disclosures are not final. Again, all these misperceptions have real repercussions in the market, and they all stem from basic misunderstandings of the real estate and mortgage finance market.
Lack of Enforcement The third problem creating a favorable environment for abusive lenders is the general absence of real enforcement in this area. It is important to understand that the mortgage lending industry is one of the most heavily regulated industries today.
Mortgage lending is subject to pervasive State regulation and must comply with a wide array of Federal consumer protection laws including the Truth in Lending Act, Real Estate Settlement Procedures Act, Fair Housing Act, Fair Credit Reporting Act, Equal Credit Opportunity Act, Fair Credit Billing Act, Home Mortgage Disclo- sure Act, Federal Trade Commission Act, and Fair Debt Collection Practices Act. We note that in practically all in- stances, these predatory loans also involve outright fraud and deception. We have to set a new priority to aggressively enforce the multitude of existing laws. MBA believes that these root causes must be addressed in order to fully erase the pernicious lending practices that are occurring today. Anything short of this full approach will fail to resolve Minnesota payday loans no credit check the crisis.
Looking Ahead I reiterate that there is general agreement that there is a problem with abusive lending in many markets today.
While there is some disagreement as to how to eliminate these practices, I believe that the mortgage industry, policy makers, and consumer representatives all share a sincere desire to end the abuses. I believe that we are all gathered here today to engage in a serious dialogue as to what needs to be done to advance real solutions to this problem. Let me then address some steps we can all take to bring an end to this problem. As I mentioned before, we all share in the responsibility to ensure that predatory lending is eliminated.
Consumers First, as outlined above, education of consumers is a most basic step in the strug- gle to push predators out of our neighborhoods. MBA believes that an educated con- sumer is the best prophylactic to predatory abuse. Presently, MBA is assembling a workgroup to develop a series of resources aimed specifically at consumers that believe that they are being victimized by predatory lenders.
The objectives of this initiative is to develop advice and materials that can be accessed directly and immediately by consumers seeking protection from unfair activities. To this end, the workgroup is developing a full list of legal rights and eth- ical norms that all consumers should expect from honest and reputable lenders. This list will be made available to the general public and disseminated to Government officials, consumer protection agencies, and consumer advocates to ensure that all prospective borrowers fully understand their rights in the transaction. In connection with this document, the workgroup will also develop a system whereby affected consumers can obtain direct access to an enforcement agency or other source of immediate assistance on items pertaining to their loan situation. MBA believes that this direct access is crucial to protecting vulnerable borrowers. Again, the goal under this system is to provide immediate help to those consumers that feel they are being victimized by loan predators. Once a consumer identifies certain suspicious signs — that is, aggressive solicitations, unexplained need cash Missouri changes at the closing table, requests to leave Minnesota payday loans no credit check line items blank on material forms — then that consumer would be empowered to seek further immediate advice from a trusted third party before completing the transaction. We note that there is no system today that effectively delivers help and useful information that a victim requires at the very point where the abuse is occurring. We are trying hard to create a structure of support that works effectively and that can be implemented immediately. We hope to report back to you very soon with good news on our advancements. As lenders and brokers, we share a strong responsibility to fight predatory abuses on various fronts. I will outline some of the examples of positive industry activities that are making a difference in this endeavor. This agreement was signed in 1994 and renewed in 1998. In this agreement, MBA committed to a number of steps that will promote fair lending and assist the industry in reaching underserved groups in our Minnesota payday loans no credit check society. These Best Practices encourage members to conduct their business according to the standards contained therein and participate in periodic audits to test for compliance. These guidelines are designed to ensure that all customers are given fair and equitable treatment. Further, MBA entered into a contractual relationship with the Mortgage Asset Research Institute (MARI) to create a national database of companies and individ- uals that have been identified by law enforcement or regulatory bodies as having engaged in illegal or improper behavior. In 1998, MBA founded the Research Institute for Housing America (RIHA) and currently funds its projects, which support research and other activities to help de- termine how discrimination occurs in home buying process, and to eliminate dis- crimination. RIHA projects also endeavor to develop useful research on meeting con- 315 sumer demand for mortgage financing in underserved markets and to measure the societal benefits and costs of homeownership. As mentioned above, we believe that consumer awareness and education are among the most effective tools available for combating predatory lending practices. In this area, we think that industry participants can do much to develop educational tools and programs that will enable consumers to make more informed choices. For example, MBA is a founding and active member of the Board of the American Homeowner Education and Counseling Institute (AHECI). The purpose of AHECI is to provide training and certification to the homeownership counseling industry.
MBA has worked with the National Council on Economic Education (NCEE) over the past several years to educate school children around the country in under- standing the importance of good credit and the need for sound financial planning and management skills, as well as how to go about purchasing and financing a home.