Realtors® care about protecting consumers from unfair lending practices and are important allies in those efforts. That is the message National Association of Realtors® President Charles McMillan delivered to the House Financial Services Committee’s Subcommittee on Financial Institutions and Consumer Credit in testimony today.
“As we have seen recently, abusive lending erodes confidence in the nation’s housing system, strips equity from homeowners and damages local and national economies,” said McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth.
In 2005 NAR adopted a set of Responsible Lending Principles to encourage lending practices that ensure consumers have affordable mortgage choices and are protected in the real estate transaction. The principles also call for ensuring strong underwriting, eliminating prepayment penalties, eliminating mortgage flipping, strengthening enforcement against predatory and abusive lending practices, and maintaining the independence of appraisers and the appraisal process.
While NAR’s written testimony further detailed the responsible lending practices that NAR has advocated for many years, the focus of McMillan’s testimony was appraisal independence. “Realtors® believe that a strong and independent appraisal industry is vital to restoring faith in the mortgage origination process,” said McMillan.
With a record of supporting legislation that strikes the proper balance of oversight and consumer protection, NAR has endorsed legislation that would strengthen the independence of the appraisal process by ensuring appraisers serve as an unbiased arbiter of a property’s value.
To protect consumers, NAR recommended that lenders be required to inform each borrower of how property value was determined and provide them with a copy of each appraisal at no additional cost. NAR also called for stronger penalties against anyone who improperly influences the appraisal process, federal support for better state enforcement, and enhanced education and qualifications for appraisers.
“The irresponsible and abusive lending that occurred during the past few years has taken a toll on our communities and our nation. Now is the time to correct these problems to ensure we do not face the same circumstances in the future,” McMillan said. “Realtors® are proud to encourage responsible lending and we stand ready to work with Congress to ensure that the nightmare of foreclosures does not overshadow the American Dream of homeownership. As the leading advocate for homeownership and the real estate industry, NAR will continue to address issues facing Americans who are trying to purchase a home, protect their current home or preserve investment opportunities in residential and commercial properties.”