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As a member of the task force, I want to commend HUD and the Treasury Department for focusing attention on the urgent need to eradicate predatory lending. Legitimate mortgage lenders condemn the deplorable practices that unscrupulous companies use to defraud borrowers. And I want to emphasize that the vast majority of those bad actors are not insured depository institutions.

America’s Community Bankers and its members pledge to continue our efforts to provide housing credit on the best terms possible to borrowers and to help them remain homeowners.

ACB’s participation on the task force, and our members who testified at the task force’s regional forums, focused on the need to help consumers avoid the predatory lending trap through more consumer education and credit counseling. ACB called for enforcement action by federal financial regulators of existing laws and recommended against passing new laws. We urged policymakers to carefully distinguish between subprime lending and predatory lending.

Task force members were not involved in the preparation of the HUD-Treasury report, nor have we endorsed it. ACB is pleased that the report recommends counseling and other means to help borrowers before they commit to high-interest rate, high-fee mortgage loans. We have pledged to work with HUD to ensure that the department has adequate resources in this area.

The recommendation in the report for greater enforcement of existing consumer protection laws and regulations is the best immediate approach to attacking the problem. We support additional funding for the Federal Trade Commission and stronger state enforcement efforts as absolutely critical to stopping predatory lending by companies that do not receive the same strict supervision as federally insured banks and savings institutions.

While the report also suggests several legislative initiatives, ACB believes that such a course would be premature. We are very concerned that new laws inhibiting affordable lending in the subprime market may inadvertently intrude on such appropriate lending practices as prepayment penalties and balloon payments that, when properly structured and disclosed, can be beneficial to consumers.

Let’s work with the laws already on the books before we pass new ones that restrict the lending of honest lenders and add new origination or data collection costs to the lending process. Let us also enforce the existing laws to eradicate unscrupulous and unregulated lending which damages the reputation of all lenders.