For example, consumers should be able to easily comprehend that a drop in their monthly payment may not translate into owing less over the long term, and may, in fact, increase their overall costs. Points and fees associated with refinancing of a high-cost loan should result in a net benefit to the borrower.Įighth, greater efforts should be undertaken to educate the public about borrowing. Seventh, frequent refinancings, or ''loan flipping,'' which unnecessarily increase the loan balance and eliminate equity should not be acceptable. Sixth, attempts to curb abusive practices should not be made at the expense of credit availablity in underserved neighborhoods. The consumer should receive a clear disclosure that the financing of points and fees is optional.įourth, a lender should not charge a borrower points or fees to renew, extend, or otherwise modify a high-cost home loan if, after the modification, the loan remains a high cost loan or if it is no longer a high-cost loan, the APR has not been decreased by at least 1.5 percentage points.įifth, lenders should not use misleading or deceptive sales and marketing practices that induce consumers to enter loan agreements they cannot afford. Third, lenders should not require a borrower to finance points and fees associated with a high-cost loan. Second, lenders should not extend credit to a borrower unless they have applied appropriate analysis to determine that the borrower is capable of repayment under the terms of the loan. The first is that consumers deserve meaningful and clearly understandable disclosures of loan agreements so that borrowers are informed, rather than confused, by all the paperwork before them.
TOP TEN PAYDAY 2 HUDS SERIES
I would like to read a series of precepts that I believe should be considered as part of addressing the predatory practices issue. I will say that, because this issue and the distinction between subprime lending and what might be considered predatory lending is such a difficult one to parse through, that I have been working for several weeks trying to develop some basic principles that I think we ought to be concerned about. We have a number of people who want to speak on this subject, and I want to get to the hearing process as soon as possible. In terms of regulators, today we will hear from a number, including the Comptroller of the Currency, representatives of HUD, as well as a whole spectrum of Federal regulators. It gave Federal regulators the authority to promulgate additional regulations to deal with new concerns as they arose. That law passed about 410-12, and by a voice vote in the Senate. Six years ago, Congress approved the Home Ownership and Equity Protection Act, HOEPA, in an effort to address abusive practices aimed at unsophisticated homeowners who were encouraged to use equity in their homes as security for additional credit. We will hear from representatives of consumers, the industry, as well as State and Federal regulators.īefore introducing the first panel, let me say that this is not the first time this issue has been before this committee. The committee meets today in response to concerns that have been raised in recent months in various parts of the country about certain practices by a small number of lenders, including allegations that senior citizens and low-income persons have been targeted for fleecing or abusive tactics. Maloney of Connecticut, Meeks, Lee, Inslee, Schakowsky, Moore, Jones and Capuano.Ĭhairman LEACH. Present: Chairman Leach Representatives McCollum, Roukema, Baker, Castle, Campbell, Ney, Ose, Biggert, Terry, LaFalce, Vento, Waters, Sanders, C. The committee met, pursuant to call, at 9:40 a.m., in room 2128, Rayburn House Office Building, Hon. Version 4 updated 08.16.10 )/DS(text-decoration: font-size:12.00pt font-family:'Times New Roman')/BS>endobj1719 0 objendobj1944 0 objendobj1981 0 objstream