Mortgage Bankers Association of America: Chairman-elect addresses ending predatory lendingIrman-elect

Robert M. Couch, chairman-elect of the Mortgage Bankers Association of America, addressed the National Conference of State Legislatures July 23 on MBA's approach to eradicate predatory lending practices by unscrupulous lenders.

Couch underscored the industry's support for the strong enforcement of existing laws and cautioned state lawmakers to realistically take into account residents who need sub-prime loans, and the value of the mechanisms that make those funds available. In total, there are 22 federal statutes that govern aspects of the mortgage application, funding and servicing process.

In addition, Couch cited laws that vary from state to state, region to region, even city to city, as drastically affecting the industry's ability to provide capital to deserving borrowers. The hardship that differing state and local laws place on the mortgage lending leads to increased compliance costs for the lender, which ultimately get passed on to the borrower. MBA believes that uniformity and standardization of state laws and increased resources can put offenders out of business.

"MBA is committed to eliminating predatory lending practices," Couch said. "Predatory lending is pure and simple, fraud. Ridding the industry of predatory lending is a high priority for us, as it threatens the very basis of the best system of supplying capital in the world. It is, in particular, a threat to the functioning of the sub-prime markets."

MBA believes there are four elements to solving the issue of predatory lending: consumer education, simplification of the mortgage process, vigorous enforcement of current laws and uniformity of laws and regulations.

"MBA and its members are committed to solving the problem of predatory lending through tough enforcement of existing laws," said Couch. "In August, we will release a formal report on the MBA-sponsored Enforce-ment Summit held in Washington, D.C., last month that was attended by federal, state and local regulators, as well as consumer advocate organizations, academicians and our MBA members."

As part of its four-pronged approach, MBA created a consumer education program called Stop Mortgage Fraud. The program provides consumers with a Bill of Rights, 10 warning signs of predatory lending and a list of contacts to report suspicious activity.

MBA is also leading the charge for simplification of the mortgage process. As a long-time champion of RESPA reform, MBA supports HUD's efforts to streamline the mortgage process, thereby empowering consumers with steps that safeguard consumers.