Committe: House Subcommittees on Financial Institutions and Consumer Credit; Housing and Community Opportunity
Home ownership has been the primary means for most American families to build and pass on inter-generational wealth. However, government-sanctioned racial discrimination in housing and mortgage finance markets robbed many families of this opportunity, and today’s racial homeownership gap is barely changed from the levels of more than 50 years ago. Closing the homeownership gap is essential to closing the racial wealth gap. Additionally, predatory mortgage lending practices drained trillions in wealth from families, especially Black, Latino, low wealth and low-income Americans. CRL successfully advocated for the Dodd-Frank Wall Street Reform and Consumer Protection Act, which has made the mortgage market far safer for consumers. CRL is building on this progress by working to ensure that all credit-worthy borrowers have access to fair, affordable, and sustainable mortgages. And that policy makers and market participants develop solutions that are appropriate to respond to the scale of this housing crisis.
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While we are heartened that the OCC has recognized many of the issues raised by state anti-predatory lending efforts in recent years, the OCC's guidance for national banks is no substitute for meaningful and effective legislative efforts at the state and federal level. Further, we are disappointed that the OCC does not identify some practices as clearly predatory and take a stronger stance on enforcing rules that prohibit banks from engaging in predatory lending. The Guidelines demonstrate recognition of some predatory lending issues, but are insufficient to protect homeowners from abusive...
Prepayment Penalties Impact Minority Neighborhoods Click here to visit our tutorial , which walks you through a Truth in Lending disclosure form, and educate yourself. For years, subprime lenders have defended prepayment penalties by claiming that borrowers with penalties get a lower interest rate. Now, groundbreaking research by CRL shows that borrowers get no rate benefits with subprime prepayment penalties -- and that residents in minority neighborhoods have much greater odds of receiving such penalties. Prepayment penalties (fees for paying off mortgage loans early) are almost nonexistent...
Prepayment Penalties Impact Minority Neighborhoods Click here to visit our tutorial , which walks you through a Truth in Lending disclosure form, and educate yourself. For years, subprime lenders have defended prepayment penalties by claiming that borrowers with penalties get a lower interest rate. Now, groundbreaking research by CRL shows that borrowers get no rate benefits with subprime prepayment penalties -- and that residents in minority neighborhoods have much greater odds of receiving such penalties. Prepayment penalties (fees for paying off mortgage loans early) are almost nonexistent...
Prepared Testimony of Michael D. Calhoun, General Counsel, Center for Responsible Lending before Subcommittee on Financial Institutions and Consumer Credit Subcommittee on Housing and Community Opportunity Joint Hearing.
EACH YEAR, PREPAYMENT PENALTIES IN SUBPRIME LOANS CAUSE 850,000 FAMILIES TO LOSE $2.3 BILLION IN HOME EQUITY WEALTH. The Penalty for Improved Credit Consider this typical scenario: An African-American family gets a subprime mortgage loan for $150,000 with a 12% interest rate. After making timely payments for three years, they realize they can qualify for a better loan. However, when the family tries to refinance, they discover their existing loan comes with a hefty prepayment penalty -- adding up to 5% of their loan balance, or about $7,500*. The family is forced to choose between paying the...