Senate predatory lending hearing to be followed by more hearings.
Senate Banking Chairman Christopher Dodd (D-Connecticut) said he called the hearing to focus on "several problematic practices" of the mortgage lending industry.
"I do not believe that all subprime or exotic lending is predatory or abusive. To the contrary--subprime credit can be a valuable tool in helping people become homeowners, and in unlocking the equity in their homes," said Dodd. "However, it is not enough simply to create homeownership. We must sustain, preserve and protect it as well. Yet, today we are seeing increasing evidence that this important source of wealth for so many American families is under a grave threat from predatory, abusive and irresponsible lending practices undertaken by too many sub-prime lenders."
Witnesses at the hearing included Mortgage Bankers Association (MBA) Chief Economist Doug Duncan, as well as two self-described victims of predatory lending and the Rev. Jesse Jackson founder and president of the Rainbow-PUSH Coalition Inc., Chicago.
In his testimony, Jackson focused on the high percentage of African Americans and minorities who have non-prime loan products, and the need for Congress to pass a law to "protect the vulnerable."
In his testimony, Duncan addressed concerns about the connection between lending industry practices and foreclosed loans.
"Abusive lending is a stain on the mortgage industry, and MBA is committed to finding solutions to help weed out bad actors. Nationally representative data show that current foreclosure rates are within normal historical ranges and that the incidence of foreclosure is largely driven by loss of employment, illness and other life events, and not by specific mortgage products," said Duncan.
"Nobody wins when homes are lost to foreclosure. The process can have a devastating effect on consumers and communities, as well as lenders and their investors," he said.
Duncan also shared MBA's perspective on what steps Congress can take to help protect consumers from abusive lending practices: "First, make financial education a priority for all Americans, empowering them with knowledge and giving consumers the tools to make good decisions," he said. "Second, simplify the mortgage process and make it more transparent so consumers can better understand the details of the transaction, and so they can more easily shop for their loan from different lenders. And finally, Congress should pass a strong and balanced uniform national standard for home-loan lending, with increased consumer protections."
Ranking committee member Sen. Richard Shelby (R-Alabama) called for a follow-up hearing with representatives of the federal regulatory agencies at the witness table, to "see what they are doing" about the problem of abusive lending.
Dodd, who in January announced his presidential candidacy, agreed with Shelby and said he plans to hold future hearings, including a hearing with regulators.
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|Comment:||Senate predatory lending hearing to be followed by more hearings.|
|Date:||Mar 1, 2007|
|Next Article:||HUD budget pushes homeownership, FHA reform.|