FROM THE FORECLOSURES.COM WEBSITE, ALEXIS' BLOG
Tuesday, July 17, 2007 @ 10:58:00 PM
Fed & States Join to Police the Subprime
The Fed [ Federal Reserve Banking System ] announced today, the day before [Ben] Bernanke addresses the House Finance Services Committee, that they will team with state regulators to police subprime-mortgage lenders and brokers -- bridging a gap in oversight that helped fuel record defaults on homes bought by borrowers with weak credit.
They are hoping this may blunt claims that the central bank has done too little to protect consumers against deceptive lending practices [ Editor's note: the central bank is privately owned despite its deceptive title of being "Federal ].
Their pilot program will include compliance reviews of firms with significant subprime-mortgage operations, the Fed said today in Washington.
``Collaboration by state and federal agencies in enforcing consumer regulations across a broad range of non-depository institutions will help us to better weed out abuses,'' Fed Governor Randall Kroszner said in an e-mail statement.
Lawmakers and consumer groups have blamed mortgage brokers for abuses that have left a record number of borrowers at risk of losing their homes. In appearances before Congress, federal bank regulators have said they lack authority to regulate state- licensed brokers.
``Mortgage brokers are a significant part of the problem in subprime,'' former Fed governor Lyle Gramley, a senior economic adviser at the Washington-based Stanford Group Co., said in an interview. ``They will make any loan to anybody.''
The pilot program, scheduled to begin in the fourth quarter of this year, will target about a dozen lenders.
Enforcement Action
Regulators will evaluate companies' loan underwriting standards and compliance with state and federal consumer- protections, today's announcement said. They will share information about reviews and investigations, and take enforcement action where necessary, the release said.
