NAR Hails Bank Regulator Statement on Subprime Mortgage Lending
Washington, DC - The National Assn. of REALTORS® welcomes a statement issued by the federal regulators of banks, thrifts and credit unions that prescribes strong underwriting and consumer protection standards in connection with certain subprime adjustable rate mortgages (ARMs). Those mortgages can impose an unaffordable “payment shock” on borrowers when the interest rate resets. They include “2/28” mortgages that have a two-year “teaser rate” that adjusts as often as every six months based on a high margin.
Until recently, escalating home prices have masked problems with such mortgages since families have been able to refinance into another subprime mortgage with low initial rates, but incur another round of high costs and fees. NAR urges lenders to act promptly to help borrowers at risk of losing their homes and, at the same time, minimize the loss to the lender.
“NAR has long been concerned about abusive lending by some irresponsible lenders. In response, NAR has adopted strong policies urging Congress and the federal regulators to set high standards to prevent abusive lending with strong underwriting and other pro-consumer lending standards,” said NAR President Pat V. Combs, vice president of Coldwell Banker-AJS-Schmidt in Grand Rapids, Mich.
“Starting with its first consumer mortgage education brochure in 2005, NAR has worked to do its share to educate consumers about how to avoid predatory lending and find fair and affordable mortgages. For families that now find themselves trapped in an abusive loan, we recently published our newest brochure called ‘Learn How to Avoid Foreclosure and Keep Your Home.’ To help families avoid predatory lenders altogether, last fall we released a brochure on ‘How to Avoid Predatory Lending,’” Combs said.