ACORN Rates Attorneys General Reaction to Crisis
In a new report from ACORN, six attorneys general have stood out for their aggressive response and creative leadership to the nation's growing foreclosure crisis.
The AGs, Richard Blumenthal of Connecticut, Martha Coakley of Massachusetts, Andrew Cuomo of New York, Lisa Madigan of Illinois, Tom Miller of Iowa and Lisa Swanson of Minnesota, also earned "A+" grades for actively seeking real data from mortgage servicing companies, pursuing cutting-edge cases against the industry's bad actors, speaking out on matters of state and federal importance, and putting their offices to work for distressed borrowers. All are outspoken advocates for federal bills to help borrowers.
During a conference call about the report, "Attorneys General Take Action: Real Leadership in Fighting Foreclosures," ACORN Financial Justice Center director Austin King praised Mr. Blumenthal for proposing predatory lending legislation in Connecticut. Mr. Blumenthal has established a task force on predatory lending and foreclosure assistance. His office also contributed $10,000 to help train more than 150 attorneys for pro-bono work.
During the conference call, Mr. Blumenthal said his office has been active in investigating investment banks and credit rating agencies and bond insurers that securitize subprime loans. That investigation is challenging working with other states but should produce results soon, he said.
"We have trained people, provided resources and staff to develop advocates who can go to bat for people who are victims or on the verge of foreclosure. We have brought cases against predatory lenders who inflated appraisals and permanently exaggerated values on homes," he said during the call.
"The future is more important. There is a challenge ahead to enlist the federal government in a partnership. This deepening crisis in housing creates an opportunity for a new aggressive way to fight fraud and protect consumers. A new federal state protection partnership is needed. A new paradigm, a new alliance."
Ms. Madigan, attorney general of Illinois, said her office has worked hard to combat abusive mortgage lending. She has instigated investigations against two of the largest mortgage lenders, Countrywide and Wells Fargo. Ms. Madigan has brought lawsuits against mortgage brokers and rescue scam artists.
"It is critical to help those facing foreclosure now. I encourage pressuring lenders to modify unaffordable loans, to help borrowers make payments and to stay in their homes. We are working with 11 state groups of attorneys general to increase loan modifications and to get data from 20 of the largest loan servicing companies."
Ms. Swanson has been actively involved in foreclosure legislation, litigation and advocacy to reform laws. She joined ACORN in pushing the Minnesota Foreclosure Deferment Act and led public education efforts about foreclosure avoidance and rescue scams. "Mortgage originators used to do something to verify the borrowers ability to pay the loan back. But with the development of the secondary market, mortgage originators made loans without even looking. They were pawned off on the secondary market with someone else holding the bag," said Ms. Swanson during the conference call. "People go into the process relying on the mortgage broker to look out for their best interest. That means having it is the duty of the agency to have a suitability standard. The notion is we ought to sell a mortgage like an insurance product or security. In 2002, the Minnesota homeownership rate was 77%.
"With the help of complicated financial products, the mortgage industry made a boat load of money. Through all that mortgage lending, we've actually lost ground. Now it is 73%. It's important to police and regulate these industries." (c) 2008 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com/ http://www.sourcemedia.com/