Better Business Practices For The Mortgage Industry

The New York Times reports on a new watchdog group for the mortgage industry.

The Fair Mortgage Collaborative is a consortium of lenders, brokers and mortgage technology providers. It has received money from the Ford Foundation.

The group wants to only extend loans that are in the borrower’s best interest. How will they know?

The group plans to identify lenders who meet its strict standards.

So far, none of the big lenders have signed up.

Bob Tedeschi writes:

He says members must submit to audits and ongoing monitoring by his staff to ensure they abide by the organization’s rules. Among the rules is one requiring that borrowers first be considered for 30-year fixed-rate mortgages. If they don’t qualify for those loans, others could be offered, but there must be “clear, verifiable benefits for the applicants,” Mr. Banker said.

Offering adjustable-rate mortgages — which could, for instance, raise monthly payments to more than 45 percent of a borrower’s monthly income — would raise a flag.

If after an audit the collaborative found that a lender had shown a pattern of offering those riskier loans to borrowers who could qualify for less expensive products, Mr. Banker said the lender would most likely be ousted from the organization.

About Luke Ford

Raised a Seventh-Day Adventist at Avondale College in Australia, Luke Ford moved to California in 1977. He graduated from Placer High School in 1984, reported the news at KAHI/KHYL radio for three years, attended Sierra College and UCLA, was largely bedridden by Chronic Fatigue Syndrome for six years, and converted to Judaism in 1993. From 1997-2007, Luke made his living from blogging. Living by Beverly Hills (Alexander90210.com), he now teaches the Alexander Technique (moving the way the body likes to move). Lessons cost $100 each and last about 45 minutes. In 2011, Luke completed a three-year teaching course at the Alexander Training Institute of Los Angeles. His personal Alexander Technique website is Alexander90210.com. Luke is the author of five books, including: » The Producers: Profiles in Frustration » Yesterday’s News Tomorrow: Inside American Jewish Journalism
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