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April
2002
NAMB President Joe Falk Participates in
Predatory Lending Roundtable
NAMB President Joseph Falk, CMC, CRMS, was invited by the Department of
Treasury to participate in a roundtable discussion on the merits of
developing a national code of best practices to address predatory
lending. The Predatory Lending Roundtable, closed to the public, was held
on March 6 at the US Treasury. The discussion was moderated by Assistant
Secretary of the Treasury Sheila Bair, Governor Gramlich
of the Board of Governors of the Federal Reserve and Assistant Secretary Weicher of HUD. Invitations were extended to
representatives from the mortgage industry, both primary and secondary
markets, and consumer groups. NAMB was the only trade association
invited. The roundtable discussion focused on three main issues.
What
are the potential advantages and disadvantages of developing a national
code of best practices to address predatory lending?
What
elements might a national code of best practices include?
Should
the Federal government consider ways to encourage the adoption of a
national code of ethics?
The consumer groups voiced their opinion that no, there should not be a
national code of ethics because it would not be enforceable if it's
voluntary and that it would be a waste of resources. The consumers groups
want to see predatory lending initiatives on the federal legislative and
regulatory levels. The primary and secondary markets discussed the
advantages of having Best Practices and that it would be a step in the
right direction. Citigroup and Household discussed their current Best
Practices as examples.
Roundtable
participants included: primary market -- Citigroup, Household, WaMu, Ameriquest, Chase
Manhattan, New South Federal Savings Bank; secondary market -- Fannie
Mae, Freddie Mac, Bond Market Association; consumer groups - Self Help
Credit Union, Leadership Conference on Civil Rights, National Consumer Law Center, Center for
Community Change, American Association of Retired Persons, National Community Reinvestment Coalition.
It is
anticipated that another panel will be scheduled in the near future to
have more discussion on the subject.
Greenspan's Cheer Could Push Mortgage
Rates Higher
Alan Greenspan says the economic slowdown appears to be over. Treasury
yields jumped higher as soon as the words were out of the Federal Reserve
chairman's mouth, and long-term mortgage rates are likely to follow.
Greenspan's
statement Thursday morning before a U.S. Senate committee marked a change
in his opinion about the economy from last week. On Feb. 27, he spoke to
the House of an "anticipated recovery" and said the business
cycle appeared to be "prompting a firming in economic
activity." On Thursday, just eight days later, Greenspan told the
Senate Banking Committee that the "recent evidence increasingly
suggests that an economic expansion is already well under way."
An
economic recovery implies inflation sometime in the future, and therefore
higher interest rates. Traders, prompted by
Greenspan's optimism, caused Treasury yields to shoot up abruptly. Fixed
rates for 15-year and 30-year mortgages tend to move along with 10-year
Treasury yields. So Greenspan's statement to the Senate was expected to
indirectly cause a rise in mortgage rates.
Specifically,
the yield on the 10-year Treasury note rose from 5.05 percent before
Greenspan's speech to 5.17 percent an hour after the speech. That's
roughly the same as a one-eighth of a percent increase in mortgage rates.
About 2 1/2 hours after Greenspan started speaking,
one prominent lender raised some of its 30-year fixed rates by one-eighth
of a percentage point. (Bankrate.com, March 7)
FHA Developing 'Appraiser Watch'
The Federal Housing Administration is developing a new system to identify
bad appraisers and kick them off the FHA's roster of approved appraisers.
The new system will be called Appraiser Watch and will
"parallel" the Credit Watch system, which has been "very
successful in monitoring lenders," HUD Secretary Mel Martinez told a
Senate panel. The Department of Housing and Urban Development intends to
issue an advance notice of proposed rulemaking to establish the Appraiser
Watch system in about three months. Secretary Martinez also told the
Senate Banking Committee that HUD has stopped its independent reviews of
FHA single-family appraisers. These reviews, conducted by HUD's Real
Estate Assessment Center, were not cost effective and did not identify
the riskier loans, the HUD secretary testified. "FHA default and
claim rates were actually lower on loans identified by REAC than for FHA
loans as a whole," he said. Over the past two years, REAC identified
32 appraisers who were removed from the FHA's roster, while FHA field
reviews identified 85 appraisers for removal. The FHA will continue to
conduct appraisal and field reviews on an individual-loan basis,
following up on complaints by homebuyers and members of Congress.
"That is how we identified the 85 appraisers," the secretary
said. (National Mortgage Newswire, Feb. 14)
HUD Mulls FHA Lender Fee Limits
HUD is considering "strict limits" on the
costs and fees that FHA lenders can charge. HUD revealed its thinking in
a news release that praises its efforts in Baltimore to stop property flipping and help the victims of flipping
and mortgage fraud. "HUD's predatory lending initiatives are making
the Baltimore housing market safer for hard-working families," HUD
Secretary Mel Martinez said. The HUD secretary wants to start similar
anti-predatory-lending initiatives in other cities with high foreclosure
rates. "Also under consideration are policy and regulatory changes
that would place strict limits on costs and fees that can be charged in
the origination of an FHA loan and provide authority to hold mortgagees more
accountable for the loans they purchase and service," Secretary
Martinez said. "Predatory lending practices have no place in the FHA
market, subprime market, or any real estate
transaction." Separately, Secretary Martinez announced that Robert
L. Woodson Jr. is his new chief of staff, replacing Daniel Murphy, who is
moving to the private sector. www.hud.gov.
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