WASHINGTON – The Coalition for Fair and Affordable Lending (CFAL) today called on the House Financial Services Committee to schedule hearings promptly on pending federal bills intended to stop so-called “predatory” mortgage lending. CFAL also urged that all parties engaged in this public policy provide constructive comments and suggestions so that the issues surrounding these federal bills can be fully and fairly debated and discussed.
CFAL specifically called for hearings on H.R. 1295, the “Responsible Lending Act,” a bipartisan compromise bill to stop abusive mortgage lending introduced by Reps. Bob Ney (R-OH) and Paul Kanjorski (D-PA), and H.R. 1192, the “Prohibit Predatory Lending Act,” introduced by Reps. Brad Miller (D-NC) and Mel Watt (D-NC).
Wright Andrews, CFAL’s Executive Director, stated: “While some refinements are needed, CFAL believes the Ney-Kanjorski legislation for the most part offers very effective and very comprehensive borrower safeguards. These provisions are much more balanced and workable than a number of provisions in the Miller-Watt proposal. It’s time to have hearings to bring out the true facts so that Members of Congress, their staff, public advocacy groups, and most importantly, consumers can get an understanding of the issues and the proposed solutions to them.”
Andrews added, “While there are good provisions in the Miller-Watt bill, it also has other fundamentally flawed sections that would significantly raise borrowers’ interest rates, making mortgage loans far less affordable and less available for many borrowers. This will only further disadvantage minority borrowers.”
Andrews also noted, “The Miller-Watt bill provisions would have a disproportionately negative effect on many African-American and Hispanic consumers. Higher percentages of these minority groups are economically disadvantaged when compared to Whites, and therefore are more likely to present higher credit risk profiles. They already find mortgage credit more difficult to obtain and less affordable as they have to pay higher rates to offset their higher risks.(1) By forcing rates even higher, the Miller-Watt bill would be devastating for many of these minority borrowers. CFAL does not want this to occur, and I am sure the sponsors didn’t intend this harmful result, but that in fact would be the unintended consequence of these Miller- Watt provisions.”
Steve Nadon, CFAL’s Chairman and Chief Operating Officer of Option One Mortgage, commented, “The Ney-Kanjorski bill, which is more comprehensive and balanced, would provide much needed uniform national standards so that all borrowers, regardless of where they live or who their lender is, would have the same strong, effective protections against abusive lending practices, and it would do so without dramatically cutting back on mortgage affordability.”
CFAL also today released a white paper rebutting many of the misleading claims that have been made against the Ney-Kanjorski bill. Among other things, CFAL’s paper highlighted that:
- Contrary to the misimpression being given by opponents, only about half of the states even have special anti-predatory lending laws, and of those that do, most of their substantive protection provisions are either weaker or no stronger than Ney-Kanjorski provisions.
- To the extent that some state laws are more restrictive, they often tend to limit borrowers’ credit availability and raise the cost of credit to many of them.
- The Ney-Kanjorski bill contains dozens of provisions that would effectively protect borrowers from predatory lending practices, and most are as strong as, or stronger than those available in the vast majority of states.
- Furthermore, this bipartisan bill offers far more comprehensive protections than any other federal or state anti-predatory lending law or legislative proposal.
CFAL wants abusive lending practices stopped and remains committed to trying to work openly and fairly with consumer advocacy, civil rights, and other groups to help Congress craft the best bill possible. CFAL hopes that all these groups and other interested parties will work constructively to achieve this goal.
(1) There are well-recognized, substantial disparities in the economic characteristics of the African American, Hispanic and White populations. See the further discussion on this issue in the CFAL paper that explains the impacts of key provisions in both bills at: http://www.fairlendingnow.org.
