Mortgage lending

Consumer Financial Protection Agency Act of 2009

hmoroz — Tue, 04 Aug 2009 12:05:27 -0400

Legislation

The middle class

Video Summary

Injustice Facts

Overview/Summary

Middle Class Position Analysis

Quotes from Experts

Beyond this Bill

Additional Resources

Consumer Financial Protection Agency Act of 2009

hmoroz — Tue, 04 Aug 2009 12:05:27 -0400

Legislation

The middle class

Video Summary

Injustice Facts

Overview/Summary

Middle Class Position Analysis

Quotes from Experts

Beyond this Bill

Additional Resources

Consumer Financial Protection Agency Act of 2009

hmoroz — Tue, 04 Aug 2009 12:05:27 -0400

Legislation

The middle class

Video Summary

Injustice Facts

Overview/Summary

Middle Class Position Analysis

Quotes from Experts

Beyond this Bill

Additional Resources

Helping Families Save Their Homes in Bankruptcy Amendment of 2009

hmoroz — Fri, 01 May 2009 14:24:08 -0400

Legislation

The middle class

Supports

Video Summary

Injustice Facts

Number of properties on which foreclosure notices were filed in 2008: 2,330,483

Percentage increase in total properties on which foreclosure notices were filed since 2007: 81

Number of foreclosures likely between 2009 and 2012, according to Credit Suisse: 8.1 million

Proportion of all households with a mortgage that will lose their home to foreclosure: 1:6

Number of homes that the Center for Responsible Lending estimates will be saved from foreclosure by the bankruptcy modification provision: 800,000

Average decrease in the property value of each home in the neighborhoods surrounding the foreclosures that are likely to occur in late 2008 and in 2009, in dollars: 8,667

Overview/Summary

Middle Class Position Analysis

Middle-Class Supports. As the economy and the housing and job markets worsen, middle-class households continue to lose equity in their homes and are less able to afford their mortgage payments. The difficulty is compounded for those locked into predatory mortgages with high interest rates. The federal government and the mortgage industry’s continued failure to address the foreclosure crisis adequately could result in as many as 8.1 million foreclosures by 2012. Despite widespread calls for action to confront the crisis, foreclosures increased 81% in 2008. Voluntary mortgage modifications by lenders and banks, encouraged by policymakers in place of comprehensive federal action, have failed to make mortgages more affordable and prevent widespread foreclosures.

Extending the same bankruptcy protections to primary residences that currently apply to luxury yachts and vacation homes is not only fair, but will reduce foreclosures by about 20%, according to Credit Suisse, and benefit about 800,000 households, according to the Center for Responsible Lending. Strengthened bankruptcy protection is also beneficial to middle-class families who are not themselves facing foreclosure: the 2.4 million subprime foreclosures that the Center for Responsible Lending predicts will occur in 2009 will result in a $352 billion decline in property values for homes in neighborhoods surrounding those foreclosures, with an average decrease in property value per home of $8,667. Preventing foreclosures in those neighborhoods will keep property values up, benefiting all homeowners. Indeed, an analysis by the Center for Responsible Lending found that similar legislation would avoid 600,000 foreclosures and thus maintain $72.5 billion in wealth for families not facing foreclosure. Modification of mortgages in bankruptcy will help maintain property values, while keeping middle-class families in their homes, limiting the self-reinforcing spiral of foreclosures and falling home prices.

Additionally, the bankruptcy provision provides a powerful incentive to banks to offer homeowners affordable loan modifications in order to avoid costly bankruptcy proceedings over which they have little control.

Quotes from Experts

Beyond this Bill

Additional Resources

“A Tax-Free Foreclosure Solution: Loan Mods Through the Courts,” from the Center for Responsible Lending

Testimony of Adam J. Levitin, Georgetown Associate Professor of Law, on the Helping Families Save Their Homes in Bankruptcy Act, before the House Judiciary Committee

FinancialStability.gov, the U.S. Treasury’s site with details about the President’s Homeowner Affordability and Stability Plan

Helping Families Save Their Homes in Bankruptcy Amendment of 2009

hmoroz — Fri, 01 May 2009 14:24:08 -0400

Legislation

The middle class

Supports

Video Summary

Injustice Facts

Number of properties on which foreclosure notices were filed in 2008: 2,330,483

Percentage increase in total properties on which foreclosure notices were filed since 2007: 81

Number of foreclosures likely between 2009 and 2012, according to Credit Suisse: 8.1 million

Proportion of all households with a mortgage that will lose their home to foreclosure: 1:6

Number of homes that the Center for Responsible Lending estimates will be saved from foreclosure by the bankruptcy modification provision: 800,000

Average decrease in the property value of each home in the neighborhoods surrounding the foreclosures that are likely to occur in late 2008 and in 2009, in dollars: 8,667

Overview/Summary

Middle Class Position Analysis

Quotes from Experts

Beyond this Bill

Additional Resources

“A Tax-Free Foreclosure Solution: Loan Mods Through the Courts,” from the Center for Responsible Lending

Testimony of Adam J. Levitin, Georgetown Associate Professor of Law, on the Helping Families Save Their Homes in Bankruptcy Act, before the House Judiciary Committee

FinancialStability.gov, the U.S. Treasury’s site with details about the President’s Homeowner Affordability and Stability Plan

Helping Families Save Their Homes in Bankruptcy Amendment of 2009

hmoroz — Fri, 01 May 2009 14:24:08 -0400

Legislation

The middle class

Supports

Video Summary

Injustice Facts

Number of properties on which foreclosure notices were filed in 2008: 2,330,483

Percentage increase in total properties on which foreclosure notices were filed since 2007: 81

Number of foreclosures likely between 2009 and 2012, according to Credit Suisse: 8.1 million

Proportion of all households with a mortgage that will lose their home to foreclosure: 1:6

Number of homes that the Center for Responsible Lending estimates will be saved from foreclosure by the bankruptcy modification provision: 800,000

Average decrease in the property value of each home in the neighborhoods surrounding the foreclosures that are likely to occur in late 2008 and in 2009, in dollars: 8,667

Overview/Summary

Middle Class Position Analysis

Quotes from Experts

Beyond this Bill

Additional Resources

“A Tax-Free Foreclosure Solution: Loan Mods Through the Courts,” from the Center for Responsible Lending

Testimony of Adam J. Levitin, Georgetown Associate Professor of Law, on the Helping Families Save Their Homes in Bankruptcy Act, before the House Judiciary Committee

FinancialStability.gov, the U.S. Treasury’s site with details about the President’s Homeowner Affordability and Stability Plan

Fraud Enforcement and Recovery Act of 2009

hmoroz — Tue, 28 Apr 2009 10:02:55 -0400

Legislation

The middle class

Supports

Video Summary

Injustice Facts

Number of Suspicious Activity Reports (SARs), which record suspicious transactions, alleging mortgage fraud in 2008: 62,084

Percentage increase in the number of SARs filed between July of 2007 and June of 2008 over the same period the previous year: 44

Increase in the number of FBI mortgage task forces permitted by the additional funds provided by the Fraud Enforcement and Recovery Act: 24

Total value of all direct spending, loans, and guarantees provided in conjunction with the federal government’s financial stability efforts, in dollars: 4 trillion

Funds committed by investors to a fraudulent investment scheme using the Troubled Asset Relief Program, in dollars: 5 million

Number of civil and criminal investigations into fraud related to the financial bailout opened by the Special Inspector General for the Troubled Asset Relief Program, as of April 2009: 20

Overview/Summary

Middle Class Position Analysis

Reckless and fraudulent lending practices, permitted by lax regulation and regulators asleep at the switch, are a leading cause of the mortgage crisis that has put millions of middle-class homeowners at risk of losing their homes. Approximately half of the subprime loans originated in 2005 and 2006 were made by independent mortgage companies which are less regulated than traditional bank lenders. Operating beneath the radar, these mortgage companies issued abusive mortgages that often targeted the aspiring middle class and minority households. The Fraud Enforcement and Recovery Act strengthens protections against the worst abuses by independent mortgage companies, such as inflated appraisals and other fraudulent activities. Increased resources for the investigation and prosecution of mortgage fraud and fraud involved with the $4 trillion financial bailout will help root out and punish those who take advantage of middle-class Americans and American taxpayers.

Quotes from Experts

Beyond this Bill

Additional Resources

“The Need for Increased Fraud Enforcement in the Wake of the Economic Downturn,” from the Senate Judiciary Committee

Office of the Special Inspector General for the Troubled Asset Relief Program

“Financial Regulation: A Framework for Crafting and Assessing Proposals to Modernize the Outdated U.S. Financial Regulatory System,” from the Government Accountability Office

Fraud Enforcement and Recovery Act of 2009

hmoroz — Tue, 28 Apr 2009 10:02:55 -0400

Legislation

The middle class

Supports

Video Summary

Injustice Facts

Number of Suspicious Activity Reports (SARs), which record suspicious transactions, alleging mortgage fraud in 2008: 62,084

Percentage increase in the number of SARs filed between July of 2007 and June of 2008 over the same period the previous year: 44

Increase in the number of FBI mortgage task forces permitted by the additional funds provided by the Fraud Enforcement and Recovery Act: 24

Total value of all direct spending, loans, and guarantees provided in conjunction with the federal government’s financial stability efforts, in dollars: 4 trillion

Funds committed by investors to a fraudulent investment scheme using the Troubled Asset Relief Program, in dollars: 5 million

Number of civil and criminal investigations into fraud related to the financial bailout opened by the Special Inspector General for the Troubled Asset Relief Program, as of April 2009: 20

Overview/Summary

Middle Class Position Analysis

Quotes from Experts

Beyond this Bill

Additional Resources

“The Need for Increased Fraud Enforcement in the Wake of the Economic Downturn,” from the Senate Judiciary Committee

Office of the Special Inspector General for the Troubled Asset Relief Program

“Financial Regulation: A Framework for Crafting and Assessing Proposals to Modernize the Outdated U.S. Financial Regulatory System,” from the Government Accountability Office

Fraud Enforcement and Recovery Act of 2009

hmoroz — Tue, 28 Apr 2009 10:02:55 -0400

Legislation

The middle class

Supports

Video Summary

Injustice Facts

Number of Suspicious Activity Reports (SARs), which record suspicious transactions, alleging mortgage fraud in 2008: 62,084

Percentage increase in the number of SARs filed between July of 2007 and June of 2008 over the same period the previous year: 44

Increase in the number of FBI mortgage task forces permitted by the additional funds provided by the Fraud Enforcement and Recovery Act: 24

Total value of all direct spending, loans, and guarantees provided in conjunction with the federal government’s financial stability efforts, in dollars: 4 trillion

Funds committed by investors to a fraudulent investment scheme using the Troubled Asset Relief Program, in dollars: 5 million

Number of civil and criminal investigations into fraud related to the financial bailout opened by the Special Inspector General for the Troubled Asset Relief Program, as of April 2009: 20

Overview/Summary

Middle Class Position Analysis

Quotes from Experts

Beyond this Bill

Additional Resources

“The Need for Increased Fraud Enforcement in the Wake of the Economic Downturn,” from the Senate Judiciary Committee

Office of the Special Inspector General for the Troubled Asset Relief Program

“Financial Regulation: A Framework for Crafting and Assessing Proposals to Modernize the Outdated U.S. Financial Regulatory System,” from the Government Accountability Office

Mortgage Reform and Anti-Predatory Lending Act of 2009

hmoroz — Mon, 30 Mar 2009 16:32:17 -0400

Legislation

The middle class

Supports

Video Summary

Injustice Facts

Percentage of delinquent loans originated by IndyMac, which failed in the summer of 2008, that required either very little or no documentation: 81.9

Approximate market share of exotic mortgage products in 2005: 19 percent

Approximate market share of exotic mortgage products in 2007: 31 percent

Percentage of all conventional loans made to African Americans in 2005 that were high cost: 54.5

Percentage of all conventional loans made to whites in 2005 that were high cost: 23.3

Percentage of option ARMs, mortgages with adjustable rates that are considered prime loans, originated in 2007 that will eventually default: 61%

Percentage of subprime loans originated in 2007 that will eventually default: 63%

Overview/Summary

Middle Class Position Analysis

Middle Class Supports. As housing prices rose earlier this decade, mortgage originators, brokers, servicers, and investors created and promoted ever more deceptive products to extract further profits from current and aspiring middle-class families. Distorted incentives throughout the industry made it profitable to aggressively market loans these families never had a prayer of paying back. Prepayment penalties imposed fees on homeowners for paying mortgage debt early; adjustable rate mortgages resulted in payment shock when low teaser rates skyrocketed to exorbitant levels; borrowers with interest-only loans found that their loan principal increased as they paid back their mortgage; and “no-doc” loans locked unsuspecting borrowers into mortgages they could not afford. Lenders often used mortgage refinancing to strip middle-class homeowners of the equity they relied on to obtain loans to help make ends meet. Negligent underwriting and plain fraud, spurred by the promise of easy profit, allowed such abusive products to proliferate from 19 percent of the mortgage market in 2005 to 31 percent in 2007. People of color were steered into high-cost mortgages even when they qualified for better products: one study finds that 54.5 percent of all conventional loans made to African Americans in 2005 were high-cost, compared to 23.3 percent made to whites.

The Mortgage Reform and Anti-Predatory Lending Act takes some steps to combat and end the abusive lending practices at the root of the financial crisis. Requiring mortgages to meet minimum standards, such as ensuring a borrower’s ability to repay a loan and a ban on “steering” high-cost mortgages to minorities, will help current and aspiring middle-class families avoid mortgages that saddle them with debt they will never be able to repay. Obliging lenders to demonstrate that refinancing will provide a tangible benefit to a homeowner will protect households from equity stripping and, importantly, promote affordability. Prohibiting certain prepayment penalties, which can increase the risk of default by as much as 20 percent, and yield-spread premiums, which encourage brokers to steer borrowers into mortgages with higher interest rates, protects potential homeowners and helps realign the interests of borrowers, brokers, originators, and investors. Finally, approximately 20 percent of new foreclosure actions involve rental properties. The Act’s protections for renters will protect individuals and families who are frequently given little or no notice that the property they rent is in foreclosure.

Yet, this bill contains serious shortcomings that will likely leave intact the destructive relationship between borrowers, brokers, originators, and investors that has worked in favor of profit-maximization, rather than in favor of quality home loans that all parties want to see repaid on schedule and in full. Indeed, much could be done to improve the legislation. Provisions that permit preemption of strong state consumer protection laws by federal statutes will harm, not help, vulnerable borrowers. Further, the Center for Responsible Lending and the National Consumer Law Center raise very serious concerns about the strength of the Mortgage Reform Act. The groups worry that remedies for violations of the Act are unworkable, that the law’s restrictions on prepayment penalties and yield-spread premiums are insufficient, and that not enough is done to ensure that “legal accountability flows through the mortgage chain.” Lawmakers should heed these concerns as the bill works its way through Congress. Additionally, future reform should mandate that a standard mortgage option, with a fixed interest rate and no “affordability” gimmicks, be offered to all homebuyers.

Unfortunately, the Mortgage Reform and Anti-Predatory Lending Act is probably the best – and perhaps the only – opportunity in the near future to reform the mortgage industry so that it looks out for the best interests of homeowners, rather than the interest of banks and brokers. In general, the Act levels the playing field for middle-class households and so should be supported. Still, we fear that the concerns of the Center for Responsible Lending and other groups will come true and homeowners will once again be left without remedy against an abusive and outsized industry that has done much harm to the economy in recent years.

Quotes from Experts

Beyond this Bill

Additional Resources

“Mortgage Lending Overview,” from the Center for Responsible Lending

Hearing of the Financial Services Committee on the Mortgage Reform and Anti-Predatory Lending Act of 2009

“Foreclosure Crisis: Working Toward a Solution,” from the TARP Congressional Oversight Panel

Mortgage lending

Consumer Financial Protection Agency Act of 2009

Legislation

The middle class

Video Summary

Injustice Facts

Overview/Summary

Middle Class Position Analysis

Related Blog: Header

Quotes from Experts

Related Blog: Text

Beyond this Bill

Related Blog: Link

Additional Resources

Consumer Financial Protection Agency Act of 2009

Legislation

The middle class

Video Summary

Injustice Facts

Overview/Summary

Middle Class Position Analysis

Related Blog: Header

Quotes from Experts

Related Blog: Text

Beyond this Bill

Related Blog: Link

Additional Resources

Consumer Financial Protection Agency Act of 2009

Legislation

The middle class

Video Summary

Injustice Facts

Overview/Summary

Middle Class Position Analysis

Related Blog: Header

Quotes from Experts

Related Blog: Text

Beyond this Bill

Related Blog: Link

Additional Resources

Helping Families Save Their Homes in Bankruptcy Amendment of 2009

Legislation

The middle class

Video Summary

Injustice Facts

Overview/Summary

Middle Class Position Analysis

Related Blog: Header

Quotes from Experts

Related Blog: Text

Beyond this Bill

Related Blog: Link

Additional Resources

Helping Families Save Their Homes in Bankruptcy Amendment of 2009

Legislation

The middle class

Video Summary

Injustice Facts

Overview/Summary

Middle Class Position Analysis

Related Blog: Header

Quotes from Experts

Related Blog: Text

Beyond this Bill

Related Blog: Link

Additional Resources

Helping Families Save Their Homes in Bankruptcy Amendment of 2009

Legislation

The middle class

Video Summary

Injustice Facts

Overview/Summary

Middle Class Position Analysis

Related Blog: Header

Quotes from Experts

Related Blog: Text

Beyond this Bill

Related Blog: Link

Additional Resources

Fraud Enforcement and Recovery Act of 2009