Mayors Press Fed to Act on Subprime Mortgages
During its annual meeting in Los Angeles on June 22 to 26, the United States Conference of Mayors called on the Federal Reserve Board to use its authority under the Home Ownership and Equity Protection Act (HOEPA) to protect home owners from abusive practices that can result in mortgage foreclosures.
The mayors are asking the Fed to:
- Apply strict limits to prepayment penalties, which should not apply after the expiration of teaser rates in prime and subprime adjustable rate mortgages
- Require escrows for all loans
- Establish clear protections and procedures for the presentation of income support documentation
- Require underwriting at the maximum possible rate or rates above the fully indexed rate to create protection from unaffordable loans.
It is estimated that $1.4 trillion in adjustable rate mortgages will reset and climb to higher monthly payments at the end of this year and in 2008, threatening to present financial hardship for close to two million families.
The U.S. Conference of Mayors is the official nonpartisan organization of cities with populations of 30,000 or more. There are 1,139 such cities in the country today.
For more information, e-mail Carlos Gutierrez at NAHB, or call him at 800-368-5242 x8242.