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Predatory Lending Bill Back in Congress |
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April 27, 2007
The legislation calls for federal certification of mortgage brokers and agents and stiffer penalties for violation of federal law. Additionally, it will authorize funding for Community Development Corporations to provide training and education. "Predatory Lending is a leading cause of foreclosures across this country," said Tubbs Jones. "It compromises the opportunity to own a home and hinders economic stability, creating greater disparities in wealth." The nonprofit Center for Responsible Lending projects that as this year ends, 2.2 million households in the subprime market will either have lost their homes to foreclosure or hold subprime mortgages that will fail over the next several years. These foreclosures are calculated to cost homeowners as much as $164 billion, primarily in lost home equity. It is also projected that one out of five (19 percent) subprime mortgages originated during the past two years will end in foreclosure. This rate is nearly double the projected rate of subprime loans made in 2002, and it exceeds the worst foreclosure experience in the modern mortgage market, which occurred during the "Oil Patch" crisis in the 1980s. Additionally only about 1.4 million of 15.1 million loans analyzed from 1998 through 2006 were for first-time homebuyers. Most were for refinancing. To date, more than 500,000 of those subprime borrowers have lost their homes to foreclosures. An additional 1.8 million are likely to follow as the market deteriorates. That's nearly 2.4 million lost homes. "In my home state of Ohio the foreclosure epidemic went from bad to worse last year as the number of new cases grew by nearly 24% from 2005," said Tubbs Jones. "Cuyahoga County led the state in new cases with 13,610 new filings last year. This ranking has attracted national attention with Ohio's foreclosure rate currently at 18% which is higher than the national average of 17%." The legislation has three main goals:
The legislation would authorizes $2 million for a certification program to require mortgage brokers and other related service agents involved in the subprime loan market to be trained and tested on the rules and regulations pertaining to mortgage lending including, not limited to The Truth in Lending Act and the Fair Housing Act. The bill also:
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