Coalition Rips CRL ARM Prediction

A recent report by a consumer advocacy group predicting a wave of foreclosures on 2/28 adjustable-rate mortgages is "grossly inaccurate," according to the Coalition for Fair & Affordable Lending, a subprime lending group."Traditional hybrid ARMs are neither a significant problem nor a disaster waiting to happen as some have claimed," CFAL executive director Wright Andrews says in a letter to federal and state banking regulators. The CFAL argues that foreclosure rates on subprime ARMs will be dramatically less than the 20% predicted in the Center for Responsible Lending study. But the CRL is not projecting a 20% foreclosure rate, according to CRL senior vice president Eric Stein. The study shows that 20% of the subprime ARMs originated in 2006 will end up in foreclosure over the life of the loans. "That is a totally different question that the CFAL letter does not address," Mr. Stein said.