Activists want foreclosure moratoriumHousing activists say families that have mortgages with questionable terms should be given six months to work out deals.WASHINGTON (CNN) -- Housing activists say most families with high-risk mortgages whose terms are questionable should not be kicked out of their homes when they are delinquent on payments. A coalition of groups Wednesday urged lenders to adopt a six-month moratorium on foreclosures to provide time to work something out. "The debt is forcing people to take second jobs, sell family possessions, and rent out a second room," said Wade Henderson, the president of the Leadership Conference on Civil Rights. The problem hits the subprime mortgage market, where people pay more for their home loans because the prime market considers them to be higher risks than other borrowers. Activists told a Wednesday news conference lenders are misleading many borrowers, who are surprised and unable to pay when expensive terms of the loan kick in. "It is not a surprise that so many homeowners are facing foreclosure when you take a look at the loan terms," Josh Nassar of the Center for Responsible Lending told reporters. "People are qualified generally just to pay for the initial rate, not the adjusted rate, which includes a payment shock of well over 30 percent." His group estimates that about 20 percent of the sub-prime loans made in the past two years will go into default and result in families losing their houses. Among demographic groups, African-American and Latino homeowners hold a large proportion of the sub-prime mortgages. They were initially developed for people having trouble qualifying for a home loan, but unscrupulous lenders have teamed with real estate agents to put people beyond their means, according to Janet Murguia, president of the National Council of La Raza. "In many cases these loans were never a good fit," she said. "We have been warning that Latinos were getting bad loans. It should not be a revelation, but it has taken families being taken out of their homes to shed light on this issue." Members of the coalition, which also includes the NAACP, acknowledged in response to a question that no lenders have committed to a moratorium on foreclosures. But Henderson, with the Leadership Conference on Civil Rights, vowed to pressure the industry to throw out questionable mortgages in favor of repayment terms that homeowners can sustain. "We have resources to generate pressure," he said, such as "the use of civil rights law, consumer laws, congressional pressure, and grass-roots advocacy." Subprime lender New Century Financial Corp. (Charts) filed for bankruptcy protection Monday. Other lenders affected by the subprime troubles include Accredited Home Lenders Holding Co. (Charts), Fremont General Corp. (Charts), Countrywide Financial Corp. (Charts) and Wells Fargo (Charts). |
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