Special to Realty/Builder Connection
The president of the National Association of Realtors told a U.S. Senate committee last month that abusive lending problems are national problems and require solutions that afford the homebuyer greater protection.
Pat Combs noted that irresponsible and abusive lending, and “problematic” loans, are disastrous not only to borrowers and their family but also to the community, and to the economic strength of those and surrounding communities.
“As we sit here today, my home state of Michigan has one of the highest foreclosure rates in America. I can tell you from personal experience that when families lose homes to foreclosure, our communities, the housing market and our local and national economies all suffer,” Combs said before the Senate Subcommittee on Housing, Transportation and Community Development.
“Realtors support making fair and affordable mortgage products available for those with less than perfect credit. At the same time, we believe such loans should only be made when it is clear that the borrower can afford to repay it. Responsible lending principles, such as those developed by NAR, need to be implemented to curb predatory lending and to rein in abusive lenders. NAR will continue to work with Congress to address the problems created by irresponsible lending practices,” said Combs.
NAR’s responsible lending policy calls for stronger underwriting standards, for all mortgage originators to act in “good faith and with fair dealings,” and provide flexibility for unique life circumstances. NAR also pledged support for legislative, regulatory and private-sector foreclosure avoidance and mitigation efforts, and increased funding for programs that provide financial assistance, counseling and consumer education to help borrowers make good decisions.
“We also believe that the penalties for abusive acts should be stronger including criminal and civil penalties,” Combs said. She also reinforced the Realtors’ desire to see FHA modernization to make “the FHA mortgage insurance program a viable alternative to subprime borrowers, both for first-time buyers and those looking to refinance into a more affordable loan.”