Government Accountability Office Study Looks at Defaults
Three major trade groups are trying to convince at least one law maker to ask the Government Accountability Office to look into the causes of what is supposedly a marked increase in foreclosures.
Historically, the main reasons that families lose their homes are job loss, divorce or major illness. And the National Association of Mortgage Brokers, Mortgage Bankers Association and American Financial Services Association are betting that's still the case.
More importantly, they're hoping that abusive lending practices lead only to a small portion of repossessions by unscrupulous lenders.
Proponents of legislation at the national, state and local levels maintain that predatory lending is now a root cause of foreclosures "but they don't have any figures" to prove their case, NAMB president Harry Dinham said in a wide-ranging interview late last month with National Mortgage News.
The three groups "would like to see an impartial, third-party study" of the exact causes of foreclosure, and believe that the findings will quiet activists who want to place what brokers and lenders see as overly burdensome restrictions on their ability to serve borrowers, especially those with less-than-perfect credit.
"Certainly, abusive lending practices are the cause of some foreclosures," Mr. Dinham, a Dallas mortgage broker, said. "But they are not the big problem the consumer activists make them out to be."
NAMB also is taking its case against so-called trigger lists to Congress, and is looking for another white knight to carry the group's banner for a national predatory lending law that puts all lenders and brokers on an even footing.
Because the Federal Trade Commission "seems to have no stomach" to act against credit repositories which sell the names of mortgage applicants who have asked for their credit scores, the 15,000-member brokers group says lawmakers need to step in to protect consumers from "wholesale calling" from unscrupulous telemarketers.
"How many good things have you gotten from somebody calling you on the phone?" Mr. Dinham asked.
The NAMB is not only worried that the clients of member-brokers will be bombarded by unwanted telephone solicitations, some of which may be bogus. It also is concerned about the possibility of identity theft by scam artists who misrepresent themselves as lenders.
Credit bureaus "are selling lists to people indiscriminately," the NAMB president said. "We need to do something so that borrowers' information is not shared recklessly."
The group is in the process of preparing a leaflet members can give to clients that explains how to "opt out" of pre-screened offers of credit.
"Opting out is the process of removing your name from lists supplied by the consumer credit reporting companies Equifax, Experian, Innovis and TransUnion," the pamphlet explains, adding that it won't affect anyone's ability to obtain credit or improve their credit scores.
The NAMB also is searching for a new standard bearer to lead the charge for federal, one-size-fits-all predatory lending legislation. The group's previous champion, former Rep. Robert Ney, R-Ohio, is now serving a prison sentence for his involvement with lobbyist Jack Abramoff.
Currently, the brokers are trying to convince Rep. Barney Frank, D-Mass., the new chairman of the House Financial Services Committee, and Rep. Maxine Waters, D-Calif., among others, that enacting a suitability standard is unnecessarily burdensome and will create more problems than it will solve.
"We don't want to do something that will cut off product," Mr. Dinham said, "We need legislation that will help the consumer without completely throttling the industry."
NAMB also is advocating better disclosure, both at the time of application and at the loan closing. MBA president John Robbins also is a staunch supporter of disclosure at application and closing.
In addition, Mr. Dinham said his group is in "full support" of regulations that require lenders to qualify borrowers who seek adjustable-rate mortgages at the fully indexed rate. "That is something that really helps consumers," the Texas broker said. (c) 2007 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com http://www.sourcemedia.com