In testimony before the U.S. House of Representatives today, MBA chairman John M. Robbins offered a surprisingly strong and personal take on the recent troubles in the subprime market, going so far as to admit that the lending industry made a mistake in underwriting thousands of subprime mortgages during the recent housing boom. The MBA chairman’s collective mea culpa represented a stark departure from the trade organization’s earlier positions, which largely characterized troubles in the mortgage market as within industry expectations. â€œWhile we must ask what lessons we should learn from our mistakes, it is equally important for those in positions of authority to help current home owners stay in their homes,â€? said Robbins. â€œWorking together, I suggest we must accomplish three things. We must stabilize the subprime mortgage credit system; provide assistance for homeowners facing foreclosure; and finally prevent this from ever occurring again.” â€œFor subprime borrowers who are facing foreclosure, industry and policymakers must partner to help provide options so that as many as possible are able to remain in their home,â€? continued Robbins. â€œChairman Dodd recently called for a summit of all parties to address this problem. MBA embraces that idea. And we at MBA strongly encourage all borrowers that find themselves unable to continue making payments to contact their lender immediately. Lenders lose money in foreclosure and have a strong desire to make any number of arrangements that will allow a borrower to start making payments again and keep his or her home.”
Robbins faulted what he called “an absence of pricing transparency” along with a complicated process of mortgage loan closing as the chief culprits behind the surge in predatory lending that now appears to have driven much of subprime lending’s growth during the recent housing boom. Reviving a call for RESPA reform, Robbin said that “[t]he mortgage market is desperate for a rewrite of the nation’s settlement laws and a strong uniform lending standard to trap predators and bring them to justice.â€? In his statement, Robbins also acknowledged that some lenders had made mistakes providing loans to some subprime borrowers. â€œWhat I have seen of late troubles me deeply. Responsible lenders only extend credit to borrowers who are willing and able to make mortgage payments. They do not trick borrowers into loans that are unsustainable. And they do not hold out something that is only a mirage of the American Dream. Yet bad loans were made. They were not made responsibly or with the best interest of consumers in mind.â€? Robbins’ full testimony can be found at http://www.mortgagebankers.org.