Mark Winston Griffith

Mortgage Reform Legislation: Stopping a Crime without Criminals

One of the sleaziest aspects of the subprime debacle that has led to foreclosures in record numbers over the past year is that it includes possibly thousands of crimes, but no one to pin them on. Because most subprime loans were neatly bundled in mortgage backed securities, the risk - and accountability - was so spread out so broadly that essentially everyone involved is able to escape culpability, and most importantly, liability for abusive lending practices.

An article in yesterday's Inman News reports that one of the major flaws of the Mortgage Reform and Anti-Predatory Lending Act of 2007, which was recently introduced by Democrats as a response to the foreclosure crisis, is that it "stops short of creating full 'assignee liability' for those who take possession of loans after they are originated...HR 3915 would give consumers the right to sue 'assignees' -- companies that take possession of loans after they are originated -- but only as individuals, not as members of a class-action suit."

There are other serious criticisms - such as the fact that the bill "stops short of creating uniform national lending standards and would leave a patchwork of state and local laws in place."

Obviously, Congress is going to face serious opposition from the mortgage industry lobby and has crafted a bill that they feel has a fighting chance of surviving. And it's hard to criticize one of the few federal legislative proposals that even remotely attempts to stem subprime abuses and hold the mortgage industry accountable. And yet the predatory lending that has occurred over the past decade represents a crime against communities across the country, a crime that not only needs to be stopped, but punished as well.

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Posted at 8:38 AM, Oct 26, 2007 in Economic Opportunity
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