Dear Chairman Bernanke and Secretary Paulson,
There is grave concern in low-income communities about a potential
coming wave of foreclosures. Because regulators are partly responsible
for creating the environment that is leading to rising rates of home
foreclosure in the subprime mortgage market, I urge you immediately to
convene a homeownership preservation summit with leading mortgage
lenders, investors, loan servicing organizations, consumer advocates,
federal regulators and housing-related agencies to assess options for
private sector responses to the challenge.
We cannot sit on the sidelines while increasing numbers of American families face the risk of losing their homes.
And
while neither the government nor the private sector acting alone is
capable of quickly balancing the important interests in widespread
access to credit and responsible lending, both must act and act quickly.
Working together, the relevant private sector entities and
regulators may be best positioned for quick and targeted responses to
mitigate the danger. Rampant foreclosures are in nobody's interest, and
I believe this is a case where all responsible industry players can
share the objective of eliminating deceptive or abusive practices,
preserving homeownership, and stabilizing housing markets.
The summit should consider best practice loan marketing,
underwriting, and origination practices consistent with the recent (and
overdue) regulators' Proposed Statement on Subprime Mortgage Lending.
The summit participants should also evaluate options for independent
loan counseling, voluntary loan restructuring, limited forbearance, and
other possible workout strategies. I would also urge you to facilitate
a serious conversation about the following:
* What standards investors should require of lenders, particularly
with regard to verification of income and assets and the underwriting
of borrowers based on fully indexed and fully amortized rates.
* How to facilitate and encourage appropriate intervention by loan
servicing companies at the earliest signs of borrower difficulty.
* How to support independent community-based-organizations to
provide counseling and work-out services to prevent foreclosure and
preserve homeownership where practical.
* How to provide more effective information disclosure and financial
education to ensure that borrowers are treated fairly and that
deception is never a source of competitive advantage.
* How to adopt principles of fair competition that promote
affordability, transparency, non-discrimination, genuine consumer
value, and competitive returns.
* How to ensure adequate liquidity across all mortgage markets without exacerbating consumer and housing market vulnerability.
Of course, the adoption of voluntary industry reforms will not
preempt government action to crack down on predatory lending practices,
or to style new restrictions on subprime lending or short- term
post-purchase interventions in certain cases. My colleagues on the
Senate Committee on Banking, Housing and Urban Affairs have held
important hearings on mortgage market turmoil and I expect the
Committee will develop legislation.
Nevertheless, a consortium of industry-related service providers and
public interest advocates may be able to bring quick and efficient
relief to millions of at-risk homeowners and neighborhoods, even before
Congress has had an opportunity to act. There is an opportunity here to
bring different interests together in the best interests of American
homeowners and the American economy. Please don't let this opportunity
pass us by.
Site Meter 
