ACB: Press Releases

Contact:	Robert Schmermund (202) 857-3104 Jim Eberle (202) 857-3145	Jim Eberle (202) 857-3145 (work) (703) 893-2593 (home) [email protected]	For Immediate Release January 31, 2001 #01-07
E-mail: [email protected]

ACB URGES FDIC TO STREAMLINE PREDATORY GUIDANCE

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Editors, Reporters:

America’s Community Bankers has urged the FDIC to “substantially streamline” its draft guidance on ways to avoid purchasing or investing in predatory mortgage loans.

ACB said that while banks can play a role in mitigating predatory lending, the FDIC’s memorandum “drastically overstates the ability of loan purchasers and mortgage-backed securities investors to police predatory lending practices.”

ACB added: “We also believe that asking secondary market participants to investigate the whole range of predatory practices could be so burdensome that loan purchasers and investors would steer clear of legitimate subprime loans.”

ACB said the guidance should focus on factors that are readily apparent to secondary market participants and that are potentially reliable indicators of predatory practices. Unless scaled back, ACB said, the memorandum could discourage secondary market participants from purchasing loans with terms that may be in some predatory loans, but are also part of legitimate loan products.

“Weeding out predatory lending practices will take a multi-faceted approach,” ACB said. In previous letters and testimony, ACB has repeatedly emphasized the need to enforce existing laws against unsupervised lenders; greater homeownership education and counseling; and improved disclosures for loans with high interest rates and high fees.

ACB’s Comment Letter is ATTACHED.

America’s Community Bankers is the national trade association committed to shaping the future of banking by being the innovative industry leader strengthening the competitive position of community banks. To learn more about ACB, visit www.AmericasCommunityBankers.com.

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