April 26, 2002

ACORN and over 25 other organizations listed below have sent the following letter to Federal Reserve Board Members urging them to move forward with collecting APR data on home loans beginning in January 2003, so that it would be available by mid-2004, rather than bowing to recent industry requests to delay this data collection.

In the Fall of 2000 the Fed's original proposal called for reporting of APRs on all home loans. In January of 2001 the Fed responded to industry concerns by instead proposing to require the reporting of APRs only on subprime loans. Now the lending industry is lobbying to delay even that reporting.

"In ACORN's efforts to win legislative protections against predatory lending at the state and local levels, we often hear bankers say that first we need more data to understand the problem," said ACORN President Maude Hurd. "But now when the Federal Reserve starts taking steps toward the long-overdue collection of some pricing data, the bankers launch a huge behind-the-scenes effort to prevent that data from being collected. The Board shouldn't cave in to bankers who are trying to keep the public and policymakers in the dark about the different kinds of loans they're making in various neighborhoods and to various populations."

For more information, contact ACORN Legislative Director Chris Saffert at 202-547-2500.

April 26, 2002

Hon. Alan Greenspan, Chairman

Hon. Edward Gramlich, Chairman, Committee on

Consumer and Community Affairs

Board of Governors of the Federal Reserve System

20th Street and Constitution Avenue NW

Washington, DC 20551

Dear Chairman Greenspan and Governor Gramlich:

We write to urge the Board not to delay the implementation of the revisions to Regulation C pertaining to the collection of pricing information on subprime mortgages. This new reporting requirement is essential for fair lending and consumer protection purposes. Thus, it is critical that data collection begin January 1, 2003, as originally indicated.

As the Board recognized in issuing the regulation, the mortgage market has changed dramatically over the past decade, but the data available to the public and elected officials about the market's lending patterns have not kept pace with those changes. The data on loan pricing are urgently needed for fair lending and other important policy purposes.

In recent days, the press has reported on an industry effort to persuade the Board to delay the collection of the new data until at least 2004, postponing public access to the data until mid-2005 at the earliest. In a recent letter to the Board, a number of banking trade associations have said that their members need more time to implement the changes to their computer systems and the staff training that are needed to comply with the new requirements.

Upon close examination, it appears that the industry may be overstating its case. The industry has been on notice at least since January about the impending revisions to Regulation C. In fact, many of the changes require little or no new computer programming. Some of the concerns the industry has raised, such as the implementation of the new racial reporting categories, are transitional issues, arising from the phasing out of one system and phasing in of another. These would occur whenever a transition took place, regardless of the lead time.

More importantly, the industry complaints completely ignore the fact that any delay in implementation of the reporting would be tremendously costly for American consumers, especially the residents of low- and moderate-income communities and communities of color where subprime lenders make disproportionate numbers of loans. Fannie Mae and Freddie Mac estimate that between 30% and 50% of borrowers in subprime loans should qualify for less expensive for prime loans. The Coalition for Responsible Lending in North Carolina has estimated that there are some 600,000 borrowers paying as much as $9.1 billion a year in excess interest and fees, prepayment penalties, and products like single premium credit insurance packed into their loans. Further, research shows that subprime borrowers face a much higher rate of foreclosure, which can have a devastating effect on families. And, given the substantial concentration of subprime loans in certain communities, especially African-American and Hispanic neighborhoods and also in Indian Country, there may be a devastating impact on whole communities. Since foreclosed properties are often boarded up and allowed to deteriorate, a concentration of foreclosures in a particular neighborhood can lower property values throughout the neighborhood and increase crime. Finally, as HUD and the Treasury Department have found in their research, the subprime market provides fertile ground for predatory lenders, whose abusive loan terms and practices trap borrowers in loans they can't afford, ultimately stripping them of their hard-earned wealth, and in many cases, of their homes.

For all these reasons, the public, the Board and other banking regulators, other policy makers, and the industry itself all need access to good information about the workings of the subprime mortgage market as soon as possible. Good data in this area will provide a foundation for good public policy decisions and also guide effective enforcement of existing laws. The revisions to HMDA the Board has announced are desperately needed and long overdue. Any delay in their implementation will have a deleterious effect on homeowners, neighborhoods and cities all across the country, and is counter to the public interest.

Our organizations have worked on a wide range of efforts to enact consumer protections against predatory lending at the federal, state, and local levels. Almost invariably, one of the first objections raised by industry lobbyists is that not enough is known about the problem and more data are needed. The Board has the opportunity to address this problem, and should do so without delay.

We urge you to move forward with implementing the new HMDA provisions, and request the opportunity to meet with you to discuss these matters in more detail.

Sincerely,

AARP

ACORN

Center for Community Change

Center for Community Self-Help

Coalition for Responsible Lending

Community Action Partnership

Congress of California Seniors

Consumer Federation of America

Consumers Union

Greenlining Institute

Housing Assistance Council

International Union, UAW

The Jesuit Conference

McAuley Institute

National American Indian Housing Council

National Association of Consumer Advocates

National Association of Housing and Redevelopment Officials

National Community Reinvestment Coalition

National Congress for Community Economic Development

National Consumer Law Center

National Council of La Raza

National Fair Housing Alliance

National League of Cities

National Low Income Housing Coalition

National Neighborhood Coalition

National Urban League

Seedco

U.S. Public Interest Research Group (National Association of State

PIRGs)

Volunteers of America

Woodstock Institute