Reducing Predatory Mortgages

Over two million households in the subprime market by year’s end will either have lost their homes to foreclosure or hold subprime mortgages that will fail over the next several years. These foreclosures will cost homeowners as much as $164 billion in home equity.

In light of this prognosis, Congresswoman Stephanie Tubbs-Jones (D-OH) recently introduced the Predatory Mortgage Lending Practices Reduction Act (H.R. 2061). This legislation would set minimum licensing standards for mortgage brokers, authorize $2 million for training and certifying of mortgage brokers, authorize $2 million for housing counseling to raise awareness of predatory practices, set minimum disclosure standards, establish standards for appraisals, and create civil penalties for violation.

The legislation would set up best practices for dispute or complaint resolutions. A best practices plan would be established and maintained in accordance with regulations that creditors would face. Employees of the creditors would be trained on best practices and would have to be reviewed and evaluated on their performance under the plan. H.R. 2061 would make brokers accountable and would set up funds to continue to educate consumers about predatory practices. A number of other bills will soon be introduced to deal with predatory lending, a problem affecting many families nationwide.

For more information, contact Dory Rand at doryrand@povertylaw.org or Patrick Hain at patrickhain@povertylaw.org.