To Solve the Mortgage Mess by AndyMcNelly


									    real estate | finance                                                                                                           keys to homeownership

                                                                    To Solve the
                                                                Empower the Consumer
                                                     by Reverend Jim Dickerson and Frank Demarais

T     he meltdown in the mortgage market, caused by
      and contributing to the unfolding default and
home foreclosure crisis, dominates the daily news
                                                          ering individuals to address their own problems and
                                                          preventing the crisis from happening again. The Dis-
                                                          trict government, in its role as regulator of financial
                                                                                                                   Responsible Homeownership coalition led by Neigh-
                                                                                                                   borWorks America, CitiMortgage, First American
                                                                                                                   Credco and State Farm that seeks to expand the
and is generating calls for various rescue plans and      services and leader of consumer protection, should       reach of responsible mortgage loan programs, with a
government interventions.                                 initiate a major campaign that is widely publicized      special commitment to District home buyers. There
    Tens of thousands of homeowners in the Wash-          in local media to educate people on the resources        are other responsible counselors and lenders trying
ington, DC, metro area as well as millions across the     available from responsible lenders, nonprofit housing     to reach at-risk home owners, but a much more ag-
country are facing increases in their monthly home        organizations and the government. The mayor should       gressive and effective media campaign and leadership
payments under adjustable rate loans they cannot af-      appoint a high profile, experienced responsible lend-     from the mayor and District government is needed to
ford. Falling home prices and stagnating sales further    ing leader/czar with authority over relevant govern-     support this outreach and connect as many people as
complicate their situation. Most experts who have         ment agencies to coordinate the campaign and set         possible with these available resources.
looked at this problem say it’s only going to get worse   an aggressive, achievable goal such as reducing sub-         In our experience of over 25 years, working with
in the coming year, creating a devastating financial       prime lending in the District by 50 percent by 2009      thousands of low- and moderate-income home buy-
and housing crisis for many, many homeowners.             from the level that existed in 2006. Our experience      ers in the District, when people receive correct, hon-
    This crisis will not just affect the individuals and   indicates that at least half of the borrowers offered     est and understandable information on a timely basis,
families in these high cost loans. It will hit the fi-     subprime mortgages would have qualified for respon-       most make good decisions for themselves and their
nancial health of the region and city as well. Forced     sible, fixed rate loans using available automated un-     families. These are highly motivated people who see
home sales and foreclosures will be concentrated in       derwriting tools.                                        homeownership as their way to get out, and stay out,
lower-income neighborhoods and more recent con-                A majority of the people in current mortgage        of a cycle of lower income status for themselves and
dominium developments, reducing values and limit-         trouble got into these bad loans because they were       their families. The overwhelming majority work very
ing financial options for those with the least financial    misled, often lied to, and seduced by artificially low    hard, make enormous sacrifices and invest everything
cushion.                                                  and very temporary “teaser” interest rates and monthly   they have in purchasing their homes. They simply
    As longtime practitioners and successful produc-      payments. Too many people come to us each day and        need good help in sorting out the best choices avail-
ers of affordable homeownership housing for low- and       honestly explain “no one ever told me the payment        able to them and then they do the rest.
moderate-income families, most all of whom are first       could go up this much.” The disclosures were not re-         Let’s take the next step, solve this problem and
time and first generation homeowners, we believe the       quired to explain the potential payment increases.       prevent it from happening again on this scale. The
solution to this problem is not in the current expen-          The District of Columbia Council has passed         resources are there, all we need is the will and leader-
sive, piece-meal, top-down, government bail-out type      helpful legislation which the mayor has signed and       ship to do it.
approach. The currently proposed solutions are one-       which is awaiting review by the US Congress. This
time band aids, which only assist a small percentage      legislation requires a one page, red paper disclosure    Reverend Jim Dickerson is founder and chairman of
of those affected and are structured so that even the      to be provided by lenders to consumers for all non-      Manna Inc. Frank Demarais is general manager of
experts find them very difficult to figure out.               fixed payment loans to show the worst case payments       Manna Mortgage, part of the Manna Inc. organization.
    A better and more lasting solution has to be lo-      in plain language with clear numbers. We helped          Manna is located at 828 Evarts St. NE and is DC’s first
cally tailored and centered on consumers, be they         work on this bill and applaud it as one of the steps     and only nonprofit mortgage company. 202-832-1845
homebuyers or home owners, educating and empow-           in the right direction. We are also part of a national   ext. 209 or ■

52 ★ East of the River | January 2008

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