Threat to Consumer Protections Sparks Opposition to House Mortgage Bill

/PRNewswire/ -- The following is being released by the National Consumer Law Center:

A bill backed by leading House Democrats who promise that it will rein in predatory lending and reform the mortgage market would do more harm than good by undermining existing state consumer protection laws and replacing them with unworkable federal mechanisms.

That's the position of nine labor, civil rights and national consumer advocacy and progressive groups that formally announced their opposition to the Mortgage Reform and Anti-Predatory Lending Act at a hearing Thursday of the House Financial Services Committee.

"The bill is complex, convoluted and simply will not accomplish its main goal - to fundamentally change the way mortgages are made in this country," said Margot Saunders, a lawyer for the National Consumer Law Center. Saunders testified at the hearing on behalf of the nine national organizations and 40 state and local legal services and public interest organizations that also oppose the bill, HR 1728.

The bill's most serious flaw is its proposed preemption of state laws that allow homeowners to challenge predatory mortgages and prevent foreclosures. HR 1728 would shut the door on these efforts to save homes. Instead, it would shelter Wall Street companies from accountability for the predatory loans that they purchase from lenders.

HR 1728 would replace the use of these important state laws with limited, complex and confusing federal claims that that would not provide any effective protections for homeowners facing foreclosures or struggling to pay predatory mortgage loans.

"This provision is so onerous and potentially harmful to low-income homeowners saddled with predatory mortgages or struggling to avoid foreclosure that we must oppose this bill, despite its promise of additional funding to legal services offices and some other positive provisions," Saunders said.

Saunders testified on behalf of the low-income clients of the National Consumer Law Center, a non-profit organization with 38 years of experience working on issues that affect vulnerable consumers, and these other national groups opposed to HR 1728: the AFL-CIO, Communications Workers of America, National Association of Consumer Advocates, National Fair Housing Coalition, Public Citizen, U.S. Public Interest Research Group and Woodstock Institute.

Saunders' testimony and a list of state and local legal services and public interest organizations that oppose HR 1728 are posted on-line at www.house.gov/apps/list/hearing/financialsvcs_dem/nclc_-_saunders.pdf.

Treasury Secretary Geithner's Plan Must Stop Wave of Foreclosures

/PRNewswire-USNewswire/ -- The following is a statement by Michael Calhoun, President of the Center for Responsible Lending, on Geithner's "Financial Stability" Plan:

We will not effectively stabilize the nation's banks and financial system until we stop the wave of foreclosures that continues to drive down the economy and harm millions of families. At least 8 million families risk losing their homes to foreclosure in the next four years. These foreclosures drive down the value of all homes, and in turn prevent a recovery of the housing and financial markets. The financial crisis will not end unless these foreclosures are reduced.

This year alone there will be 2.4 million foreclosures. The 75 million families who happen to live near those properties will see their home values drop an additional $435 billion. That amount could more than triple over the next four years to nearly $1.5 trillion. Declining property values means less tax revenue to support schools, police, and other essential local services. The negative effects from foreclosure losses are cascading through the economy and harming us all.

We understand that Treasury Secretary Geithner will soon outline a plan to help prevent foreclosures. We eagerly await this plan. For it to be effective, it must be ambitious and must include a combination of carrots and sticks to stop preventable foreclosures and keep families in their homes.

Several steps are essential:
-- Homeowners facing foreclosure must be allowed access to the court
system to seek reasonable adjustments on their home loans. This
solution will not cost taxpayers a dime, and, conservatively, would
prevent 800,000 foreclosures.

-- Incentives such as the FDIC's loan guarantee program must be adopted
to give industry an incentive to modify more of the unaffordable loans
it made;

-- The federal government should obtain clarity on accounting rules and
buy delinquent loans from private-label mortgage-backed securities or
take other direct action that will break through the obstacles that
are currently preventing badly needed home loan modifications; and

-- The full $100 billion of TARP funds targeted by Congress for
foreclosure relief must be used to directly help homeowners.

Congress Introduces Bill That Would Reinstate Downpayment Assistance: Nehemiah Responds

/PRNewswire/ -- The following statement was issued today by Scott Syphax, president and CEO of the Nehemiah Corporation of America in response to H.R. 600, a bill introduced in Congress that would reinstate seller-funded downpayment assistance (DPA). Prior to the October 1, 2008 ban on DPA, Nehemiah was the oldest and largest provider of downpayment assistance.

"With foreclosures on the rise and banks maintaining their stranglehold on credit, we commend Congressman Al Green for recognizing the important role downpayment assistance can play in the market's recovery. Through H.R. 600, DPA offers a simple solution that can empower thousands of worthy families to take advantage of depressed home prices therefore reducing the glut of homes on the market. Further, it does so without spending a single government or taxpayer dime according to the Congressional Budget Office. Creating opportunities for sustainable homeownership will be a cornerstone to strengthening a crumbling housing market and breathing life back into the economy. As the Obama Administration takes the reins tomorrow, we call on Congress to reach across the aisle and prioritize broadening opportunities for responsible homeownership in America by reinstating DPA."

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