Pa. banking chief wants laws to stem surge of foreclosures
Economic newsBy The Associated PressHARRISBURG, Pa. – Pennsylvania’s banking secretary said March 15 he will press for new laws and regulations to stem a surge of home foreclosures that he said were due in part to unscrupulous lending practices.Bill Schenck said the Banking Department believes it can reduce the state’s mortgage foreclosure rate, one of the nation’s worst, by focusing on subprime lending – loans issued at higher rates and larger fees to customers with relatively poor credit.Pennsylvania is one of a number of states that have been hard-hit by foreclosures in recent years as home ownership opportunities have expanded, including for people with poor credit. Subprime loans are most prevalent in low-income and minority neighborhoods.In two reports made public March 16, the state is provided its first comprehensive picture of the foreclosure problem in Pennsylvania, and recommending ways to help reduce the number of people losing their homes because they can’t pay their mortgages.Copies of both reports were released to the Associated Press, which in a series of stories last year documented the statewide scope of the foreclosure problem.The state reports did not provide a total for all foreclosures in Pennsylvania but looked at selected areas. In 14 counties, including most of the largest, there were 21,627 in 2003, up from 15,610 in 2000.Statewide, the number of homes lost to sheriff’s sales from 2001 through 2003 was estimated at 55,000.Only Ohio, Kentucky and Indiana had a higher number of subprime loans in foreclosure in the third quarter of 2003, one of the periods analyzed.”It seems to me an overly aggressive salesperson putting someone in a mortgage that, the day they close on that mortgage they can’t make the payments – or that the mortgage is doomed to fail – that’s abusive lending,” Schenck said in an interview.The Banking Department is recommending greater controls on mortgage brokers and loan solicitors and increased law enforcement authority for the department.Gov. Edward Rendell’s administration also wants lawmakers to consider setting up an emergency fund for victims of abusive lending and allowing for licensing of individual loan solicitors. Currently, only companies are licensed, which makes it harder to discern patterns of abusive loans by an individual.The mortgage industry in the past has resisted tighter regulations.John G. Anthony II, president of the Pennsylvania Association of Mortgage Brokers, said individual licensing seems like a good idea but added, “The devil’s in the details. We’re going to work through the process to make sure it makes sense for everybody – consumers and the industry and the regulators.”
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