WASHINGTON –- Doug Duncan, chief economist and senior vice president of research and business development for the Mortgage Bankers Association testified today before a hearing of the Senate Committee on Banking, Housing and Urban Affairs on the issues of predatory lending, home foreclosure and federal efforts to protect consumers and told the committee members the mortgage industry is working and has resulted in helping nearly three-quarters of consumers achieve the American dream of owning a home.
"The mortgage industry has been extremely innovative in development products and tools that create homeownership opportunities, expand affordability and facilitate greater consumer choice that has helped our country reach a near 70 percent homeownership rate,” Duncan said. "MBA is concerned that approaches such as rigid, new underwriting standards and the imposition of suitability requirements will rollback hard fought homeownership and fair lending gains and will stifle innovation and take good financing options out of the hands of homeowners, limiting consumer choice. The effect will be to reduce available and affordable credit, undermining our mutual goal of putting Americans in homes and keeping them there. The mortgage market has performed well for consumers and for the larger economy, and any policy that is not based on sound facts has the potential to undermine these benefits.”
Duncan also addressed concerns about the connection between the mortgage industry’s practices and failed loans. He called abusive lending "a stain on the mortgage industry,” and said the MBA "is committed to finding solutions to help weed out bad actors.”
He continued to state that, "Nationally representative data show that current foreclosure rates are within normal historical ranges and that the incident of foreclosure is largely driven by loss of employment, illness and other life events, and not by specific mortgage products. Nobody wins when homes are lost to foreclosure. The process can have a devastating affect on consumers and communities as well as lenders and their investors.”
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To help protect consumers from abusive lending practices, the MBA’s chief economist suggested Congress make financial education a priority for all Americans, "empowering them with knowledge and giving consumers the tools to make good decisions.”
He also recommended Congress simplify the mortgage process and make it more transparent "so consumers can better understand the details of the transaction and so they can more easily shop for their loan from different lenders.”
Lastly, Duncan advised Congress to pass "a strong and balanced uniform national standard for home loan lending with increased consumer protections.”
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