Newly-formed Americans for Fairness In Lending (AFFIL) has called on regulators to use the crisis within the subprime lending industry as an opportunity to “reign in rogue practices.” [sic] I think everyone recognizes that the subprime lending crisis is caused by a number of factors, from uninformed and unwise borrowers to greedy mortgage lenders to banks that have turned a blind eye for too long. Maybe aggressive regulation–for at least a time–is the right way to ensure that everyone involved is forced to be responsible.
Because the entire economy is suffering as a result of the subprime lending crisis, not just those involved.
AFFIL’s press release after the jump.
(March 23, 2007) Kirsten Keefe, Executive Director of Americans for Fairness in Lending (AFFIL), released the following statement in response to the crisis in subprime mortgage lending:
“Regulators can turn this crisis into an opportunity by reigning in rogue practices in the subprime mortgage lending industry. The inherent design flaws in the subprime mortgages can and must be changed. Foreclosures not only have a devastating impact on families, they impact communities, lower property rates, affect tax bases, and prohibit asset-building. Predatory practices need to end immediately and solutions must be designed to help the millions of distressed Americans who have mortgages they cannot afford and are forced to sacrifice basic necessities to pay profits to lenders.
“At the same time, we should not throw the baby out with the bath water: we need to find ways to support lending to low-income families; subprime loans don’t have to be predatory. Meaningful regulations and real oversight can ensure that lenders provide loans that help Americans move into homeownership and move into prime rates over time. We oppose predatory and damaging subprime mortgages, but not legitimate subprime loans that encourage asset-building for Americans.
“Lenders must act responsibly and make loans that are affordable into the future. Servicers should deal fairly with borrowers. Vulnerable populations should not be targeted and sold abusive loans. Borrowers must be given full and clear disclosure of their loans terms and not be misguided by third-party brokers. Lenders should open their books and be accountable to not only their investors, but to their borrowers and to the regulatory agencies. Finally, regulators need to step up their oversight and demand that lenders lend responsibly.”
The subprime mortgage crisis comes as no surprise to the national consumer and civil rights groups involved in Americans for Fairness in Lending. AFFIL partners have documented the impact of predatory mortgage lending on families and communities over the past decade and repeatedly warned that making loans to people who cannot afford them is an unsustainable business model. It is only now, after the dollar volume has become so great and investors are being impacted, that the issue has drawn real attention. As part of its national public awareness campaign launched this month, AFFIL is providing consumers with tools to fight back against such predatory lending practices at http://www.affil.org.
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Kirsten Keefe is Executive Director of Americans for Fairness in Lending and a long-time consumer lawyer. She is a frequent trainer of counselors and lawyers on consumer law issues.
Americans for Fairness in Lending (AFFIL), is a non-profit organization working to end predatory lending practices, provide information to help consumers, educate policymakers about the need for reform, and demand action to assist debt-burdened Americans. AFFIL was created through a partnership of national consumer, civil rights, faith-based, non-partisan and grassroots organizations, including ACORN, Center for American Progress, Consumer Federation of America, Consumers Union, NAACP, National Consumer Law Center, National Council of La Raza, UAW, and U.S. PIRG, among others. AFFIL’s goal is to establish fair lending principles and practices that will build and preserve individual and community assets. http://www.affil.org