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PSN on December 7, 2009 - 11:50am
Foreclosure and Anti-Predatory Lending Reforms
Monday, December 7, 2009
Foreclosure and Anti-Predatory Lending Reforms
There will be 2.4 million foreclosures in 2009 along with 9 million foreclosures between 2009-2012, according to the Center for Responsible Lending (CRL). CRL also estimates that 69 million homes will lose property value because of nearby foreclosures for a total property value loss of $502 billion.
As part of our Multi-State Shared Agenda, the Progressive States Network is working with its partners and leading experts to promote reforms to stem the foreclosure crisis and put in place reforms to discourage predatory lending practices in the future.
Through coordinated, strategic support, PSN and our allies will be working to introduce and advance legislation to address foreclosure and predatory lending reforms, providing model legislation, policy analysis, messaging and more - all of which has been gathered and will be constantly updated on our Foreclosure & Predatory Lending web page.
Our policy staff are also available to answer questions and supply information not on the website. Legislators and advocates can contact us about supporting the Foreclosure Reform and Anti-Predatory Lending campaign through our website or by emailing email@example.com.
Summary of Policy and Why It Matters
Although record foreclosures are currently wreaking havoc in communities across the nation, the federal response has been weak and has so far failed to stem the rising tide of foreclosures. Many borrowers have little or no contact with their creditor prior to foreclosure, not to mention attempts to modify the mortgage.
Why Anti-Foreclosure Policy Matters: Mandating foreclosure mediation will bring the parties together, which will lower the number of foreclosures without allocating scarce resources. Requiring lenders foreclosing on homes to maintain those properties and giving foreclosed homeowners the right to remain in their homes as renters for a specific amount of time will keep vacant homes from contributing to blight, and help prevent homeowners from having their families' lives disrupted. By cracking down on illegal practices by predatory lenders, particularly giving whistleblower protection to front-line banking employees, states can stop the exploitation of moderate- and low-income communities.
Based on the best of state policies enacted and recommendations of national experts, the following are some key model provisions for alleviating the crisis for families and communities due to the foreclosure crisis.
Key Provisions include:
Messaging on Anti-Foreclosure Policy
Address the Financial Insecurity of American
Families: Homeowners who thought themselves financially secure are now
vulnerable in a way most never even contemplated.
Tap the Public Anger Against Financial
Institutions: Average Americans are absolutely incensed about what
appears to be a rigged financial system where businesses destroy jobs and
wealth, only to be rewarded with government bailouts.
Requiring Buyers to Maintain Foreclosed
Properties and Allowing Former Owners to Rent Them can Preserve Communities.
Whistleblower Protection for Bank Employees can Deter Bad Bank Practices: Protecting the employees of financial institutions from retaliation when they reveal criminal or unethical conduct by their employers can help bring predatory practices to light. Many tellers, loan officers and other retail banking employees report a culture of corruption with managers firing workers who don't engage in predatory practices. Many of these employees want to do the right thing and put a stop to these practices, which undermine the financial well-being of their clients, but fear of losing their jobs keeps them from doing so.
Building a Campaign
There are a few broad-based archives of policies adopted
around the country to ease the foreclosure crisis, including:
Other Key Organizations Supporting Foreclosure and Predatory Lending Reforms: Americans for Fairness in Lending (AFFIL), National Consumer Law Center Foreclosure Prevention, ACORN Stop Foreclosures Campaign, DEMOS.
Overall Analysis of Reform: Beyond the Mortgage Meltdown: Addressing the Current Crisis, Avoiding a Future Catastrophe (DEMOS), Assets & Opportunity Special Report: Net Worth, Wealth Inequality and Home Ownership during the Bubble Years (CFED).
Malfeasance of Subprime Brokers: For more specific information on the worst of the scams against home loan borrowers, see Steered Wrong: Brokers, Borrowers, and Subprime Loans (CRL), Predatory Lending Scams Targeting First-Time Homebuyers (NEDAP).
Effects of Subprime Mortgages on Communities: A number of reports detail the broad-based damage to communities from the foreclosure crisis, including Soaring Spillover: Accelerating Foreclosures to Cost Neighbors $502 billion in 2009 alone; 69.5 million homes lose $7,200 on average (CRL), Neighborhood and Individual Impact of the Subprime Mortgage Lending Crisis: Reporter’s Guide (AFFIL), Home Insecurity: A set of reports on neighborhoods in trouble due to foreclosure (ACORN).
On Importance of Whistleblower Protection for Banking Employees: For more on why free speech rights for bank employees can help blow the whistle on predatory lending practices in the future, see Protecting Whistleblowers (Public Citizen), Protecting Consumers and Workers Fact Sheet and Whistleblower Protections Archive (SEIU).
Racial and Other Disparities in Subprime Lending: A number of reports detail the racial and gender disparities involved in the lending industry, including:
PSN Support in Your States
PSN has already begun working with legislators and advocates to provide support for them as they introduce foreclosure reforms around the country. We'd like to work with many more!
Our policy staff are also available to answer questions and supply information not on the website. Legislators and advocates can contact us about supporting Foreclosure and Anti-Predatory Lending campaigns through our website or by emailing firstname.lastname@example.org.
As bills are introduced and sessions begin, PSN will provide ongoing resources and updates on foreclosure reform and anti-predatory lending legislation, as well as help coordinate strategy and information sharing with our partners among sponsors and advocates.
3 Steps Forward
2 Steps Back
The Stateside Dispatch is written and edited by:
Nathan Newman, Executive Director
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