Robbins issued the following statement:

“I applaud Senator Schumer and the other members of the JEC for their efforts to quantify the negative effect that rising foreclosures are having on local communities.  This is a serious problem that is hurting borrowers, communities, lenders and investors.

A number of the policy initiatives the study proposes are solutions that MBA strongly applauds and for which we have a long record of advocating.  We support a uniform national standard to combat predatory lending, as well as foreclosure prevention programs. Remember, according to the JEC report itself, a foreclosure can cost a lender as much as $50,000 per event.  We have already begun discussions with regulators, investors and other stakeholders on new products to help those borrowers who find themselves having trouble paying their loans.

We do, however, have grave concerns about a suitability standard.  Mortgage lenders are not analogous to financial analysts in this way and a subjective suitability standard could threaten decades of fair lending gains.

It is important to note, we believe the report overstates the potential number of foreclosures.  By relying on faulty, inflated data to draw its conclusions, the report paints a far more dire picture of the landscape than MBA’s studies support.  Further, the report relies on a flawed report by the Center for Responsible Lending that issued a projection of foreclosures based on unrealistic, worst-case assumptions.  In addition, the report relies heavily on foreclosure estimates from RealtyTrac, an internet-based firm specializing in marketing foreclosed properties.  MBA estimates that RealtyTrac overstates the number of foreclosures by around 30 percent.

We agree that a major cause of foreclosures is local economic conditions, not the fact that loans were made to subprime borrowers.  For example, the states of Ohio, Michigan, Indiana, Illinois and Wisconsin represent only about 14 percent of outstanding mortgages in the country but account for 28 percent of the loans in foreclosure, and subprime borrowers account for only about half of the loans in foreclosure in these states.  This region has lost over 700,000 jobs since the middle of 2000 and it is clearly problems with the economy in this region that are driving the ability of borrowers to repay their mortgages or sell their homes if they get into trouble. 

We look forward to working with Senator Schumer and other members of the Committee, as well as all interested legislators, regulators and other stakeholders to help those consumers who are in a loan they can’t pay and to try and prevent more people from getting in trouble in the future.”  

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The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry that employs more than 280,000 people in virtually every community in the country. Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation's residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 2,200 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, Wall Street conduits, life insurance companies and others in the mortgage lending field. For additional information, visit MBA's Web site:  www.mortgagebankers.org.