HOUSE SUBCOMMITTEE ON FINANCIAL INSTITUTIONS AND CONSUMER CREDIT HOLDS HEARING ON RISKY MORTGAGE PRODUCTS
On March 27, 2007, the House Financial Services Subcommittee on Financial Institutions and Consumer Credit for the hearing entitled, "The New Regulatory Guidance on Subprime Hybrid Mortgages: Regulators and Response." The first panel consisted of federal and state banking regulators who were questioned for approximately 3 hours on why it has taken the agencies so long to issue lending guidelines that stop abusive lending practices. A second panel of witnesses included representatives the Mortgage Bankers Association, National Association of Mortgage Brokers, the Center for Responsible Lending and two additional consumer groups.
Subcommittee Chair Carolyn Maloney (D-NY) and Representative Paul Gillmor (R-OH) framed the debate on proposed banking regulatory guidance that would require all financial institutions to underwrite risky subprime hybrid mortgages which include loans with a short-term interest "teaser" rate for the first two or three years (known as 2/28s and 3/27s) at the fully indexed rate. Representative Ruben Hinojosa (D-TX) introduced NAR’s strong statement advocating for stronger anti-predatory lending legislation and also highlighted NAR’s consumer education brochure entitled, "How to Avoid Predatory Lending." To read NAR’s testimony, please go to:
http://www.realtor.org/fedistrk.nsf/files/testim_subprime_032707.pdf/$FILE/testim_subprime_032707.pdfFor a copy of NAR’s consumer education brochure, please go to:
http://www.realtor.org/HousOpp.nsf/Pages/PredatoryLendingBrochure?OpenDocumentFollowing the hearing, House Financial Services Committee Chairman sent a letter to the members of the committee outlining his anti-predatory lending legislation, which will be introduced later this year. Chairman Frank also indicated that he intends to hold more hearings on the scope of the predatory mortgage lending problem and its implications for homeowners and the economy. To read Chairman Frank’s letter, please go to:
http://www.realtor.org/GAPublic.nsf/files/letter_pred_lend_bfrank_032907.pdf/$FILE/letter_pred_lend_bfrank_032907.pdfFor more information, please CONTACT: Lynn King, lking@realtors.org, mailto:lking@realtors.org , 202-383-1156, or Jeff Lischer, jlischer@realtors.org , <mailto:jlischer@realtors.org, 202-383-1117.