NAMB President Testifies Before Federal Reserve Board Hearing on Curbing Abusive Lending Practices

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RISMEDIA, June 15, 2007-NAMB President Harry Dinham cautioned regulators that expanding? the Home Ownership and Equity Protection Act (HOEPA) to address abusive mortgage lending practices would not effectively solve the problem.

“We are not convinced HOEPA is the best forum for many of the measures needed to address the abusive lending practices effectively,” said Dinham, during testimony before the Federal Reserve Board’s hearing on HOEPA. “What needs to be addressed today are practices that are unfair, deceptive and unethical,” he said.

Dinham offered alternative solutions to expanding HOEPA including: effective disclosures; principled-based guidance and adequate oversight of all mortgage originators; and effective consumer education.

“Expanding consumer knowledge and awareness, not restricting consumer choice, should be the goal of any proposed guidance, regulation, or legislation aimed at curbing abusive lending practices,” said Dinham.

He emphasized that NAMB proposes the creation and use of a consumer-tested, one-page payment disclosure that would clearly communicate key loan features. All mortgage originators would be required to give consumers the payment sheet early in the home loan process and again at closing, he added.

In addition, Dinham conveyed the importance of regulating practices, not products.

“Since 2002, NAMB has called for an increase in professional standards, education requirements, and criminal background checks for all mortgage originators.”

He also noted NAMB’s continuing support for best practices that address ethics and financial literacy. “We also recommend that as a uniform, industry-wide practice that all mortgage originators conduct their business and operate under a duty of ‘good faith and fair dealing.’”

For more information, visit www.namb.org.

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