HUD
No. 03-002
Lemar Wooley
(202) 708-0685 x6631
www.hud.gov/news
|
For
Release
Monday
January 13, 2003 |
HUD ANNOUNCES NEW RULE TO PROTECT HOMEBUYERS FROM PREDATORY LENDING
PRACTICES
WASHINGTON - The Department of Housing and Urban Development today
announced another step in its efforts to protect homebuyers from predatory lending
practices by publishing a proposed "lending accountability" rule that makes
lenders accountable for appraisals on mortgages insured by the Federal Housing
Administration (FHA). The rule will be published in the Federal Register.
Predatory lending results when home purchasers become unwitting victims of
lenders, sellers and appraisers, often working together. The unsuspecting homebuyers
either purchase homes with sales prices far in excess of the fair market value,
or are substantially overcharged with costs associated with obtaining a mortgage.
"The Bush Administration is doing everything we can to protect homebuyers,
particularly minorities, from unscrupulous predatory lending practices," said
HUD Secretary Martinez. "Predatory lending has no place in the FHA market, sub
prime market, or any real estate transaction."
"We are committed to creating 5.5 million new minority homeowners by the end
of the decade, the key to making the dream of homeownership a reality for more
people," added Martinez.
The proposed rule "FR-4722
Lender Accountability for Appraisals" makes lenders accountable for the
quality of appraisals performed by the appraisers the lender hires, and has
been reviewed by Congress and will be published in the Federal Register for
comment today.
This rule seeks to strengthen HUD's regulations concerning the responsibilities
of lenders in the selection of appraisers to perform appraisal on properties
that will be security for FHA insured mortgages.
The rule makes lenders strictly accountable for the quality of the appraisals
and specifies that lenders that submit appraisals to HUD that do not meet FHA
requirements are subject to the imposition of sanctions by HUD's Mortgagee Review
Board.
The rule will help assure that homebuyers will receive accurate statements
of appraised values on homes they purchase using FHA mortgage insurance. The
proposed rule will be revised after the consideration of public comments into
final form for implementation.
Other recent actions by the Bush Administration to protect homeowners from
predatory lending and promote homeownership include:
A recent plan announced by HUD to expand protection of homeowners by proposing
performance standards for appraisers of FHA-single family homes under its Appraiser
Watch Initiative. Under Appraiser Watch, some 25,000 appraisers will be held accountable for
faulty appraisals, which too often lead to default and foreclosure. FHA will
monitor appraisers' default and claim rates and will levy sanctions - including
removal from its list of approved appraisers - against those whose rates are
excessive.
A proposal to reform the regulatory requirements of the Real Estate Settlement
Procedures Act (RESPA) that would make the process of buying and refinancing
a home significantly simpler, potentially less expensive and would protect consumers
from unscrupulous lending practices.
The "Homebuyer Bill of Rights," which requires greater disclosure of costs
associated with buying a home, allows consumers more choices in choosing providers
of closing services, limits excessive settlement fees and encourages innovation
and competition in the marketplace.
HUD is the nation's housing agency committed to increasing homeownership, particularly
among minorities, creating affordable housing opportunities for low-income Americans,
supporting the homeless, elderly, people with disabilities and people living
with AIDS. The Department also promotes economic and community development as
well as enforces the nation's fair housing laws. More information about HUD
and its programs is available on the Internet.
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