Forward on reverse: Reaching out to my reverse readers – NMP Skip to main content

Forward on reverse: Reaching out to my reverse readers

National Mortgage Professional
Dec 29, 2004

Gramm stresses need to define "predatory lending": Report reinforces NAMB positions on key issuesmortgagepress.compredatory lending, analysis, data, After working closely with NAMB and other key trade groups, Senator Phil Gramm, Chairman of the State Committee on Banking, Housing, and Urban Affairs, released a committee staff analysis of responses from nine federal regulatory agencies to inquiries about the definition of "predatory lending," and the data each agency has collected about predatory lending. Released on August 25, the staff report finds that: •The regulators do not have and did not provide a definition of "predatory lending." •The regulators do not have systematic or organized data on predatory lending, and collected data is anecdotal at best. •The regulators are still in the early stages of gathering data. •The regulators blur the distinction between sub-prime lending and predatory lending. •The regulators do not report any lack of existing legal authority to penalize those abuses that they identify. "As the regulators themselves admit, there is not definition of predatory lending," Senator Gramm said. "I don't know how we can hope to address the problem before we have decided what it is. This is the first step, and we cannot skip it." "If we act hastily to stop predatory lending without knowing what it is, we could end up cutting off legitimate loan sources and ending the home ownership dreams of millions of Americans. I, for one, am not willing to take that risk." "The letters from the regulators recognize that a practice that can be abusive in some contexts can also, in absence of fraud or deception, be highly beneficial to consumers. Well-meaning but haphazard reactions on the part of the regulators or Congress may have the unintended consequence of hurting those whom we intend to help." "The regulators and the courts already have a number of tools to combat the illegal and abusive practices that have been labeled 'predatory' in the anecdotal information. To date, any failures have been failures to apply existing laws rather than any demonstration of inadequacy in the laws themselves." The committee report is a major step forward on the issue of predatory lending. As the report was in development, NAMB members and staff had extensive meetings with the Senate Banking Committee to make recommendations on the report and its contents. The conclusions in the report closely mirror the Congressional testimony of NAMB President Neill Fendly, and build on the work done by NAMB's federal negotiating team led by Mr. Fendly and joined by Legislative Chairman Jim Nabors, NAMB Counsel Robert Lotstein, and Director of Governmental and Public Affairs Channing Nuss. To read the full text of the staff report, visit www.senate.gov/~banking/docs/reports/predlend/predlend.htm.
Published
Dec 29, 2004
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