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Lenders Express Concern over Fed Consumer Protection Amendments

WASHINGTON, DC-The Board of Governors of the Federal Reserve votes to amend the Home Ownership and Equity Protection Act in an effort to protect consumers from predatory lending. But the Mortgage Bankers Association of America says the changes will leave lenders exposed to unsubstantiated claims.

By Barbra Murray | Updated on December 16, 2001

WASHINGTON, DC-The Mortgage Bankers Association of America doubts that the Board of Governors of the Federal Reserve’s recent vote to amend the Home Ownership and Equity Protection Act will deter predatory lending practices and help borrowers. MBA also claims the changes will lead to the lending industry’s exposure to unsubstantiated claims.

The most notable points in the regulatory amendments include lowering the annual percentage rate requiring lenders to gather documentation showing consumers’ ability to repay HOEPA loans, and adjusting fee-based triggers to include amounts paid at closing for loss-of-income insurance and other debt-protection products. Another key provision prohibits a creditor from holding any loan subject to HOEPA from refinancing the loan within twelve months of its origination.

“MBA is genuinely concerned that the Board’s decision to finalize these rules could result in reductions of credit availability to those consumers that are most in need,” MBA Chairman-Elect John Courson says in a news release. He continues, “Under the new provisions lenders will be thrust in an unfair position of having to divine the definition that a judge will give to the ambiguous term of ‘borrower’s interest.’ “

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