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Fair Mortgage Collaborative (FMC) is a non-profit organization created by the Ford Foundation [1] and the Heron Foundation in 2009 to combat the abusive practices of predatory lending in the US home mortgage world. The company's main objective is to help consumers avoid predatory lenders and brokers, and enable them to obtain safe, fairly priced loans. [2]
To combat predatory lending, the Fair Mortgage Collaborative certifies mortgage lenders, brokers, credit unions, and community banks as "Fair and Safe" based on the "Fair and Safe Lending Standards" they established. These standards were developed, written, and approved by mortgage industry thought leaders; mortgage industry loan officers, brokers, advocates; and other mortgage experts. The standards are strict and the certification process is lengthy. Once the lender is approved, they can place the "Fair Loan Certification" seal on their website and collateral. The Fair Mortgage Collaborative continues to watch each lender's loans to ensure their continuing compliance with the standards.
Most recently, with the passing of the Dodd-Frank bill, many of the Fair Mortgage Collaborative's standards have been set into law. However, there is a general apprehension among experts in the home mortgage field that many unscrupulous lenders will continue to find loopholes and abuse consumers. Therefore, the Fair Mortgage Collaborative is currently undergoing some changes to make their organization more consumer and research-focused. They are creating an easy-to-use portal of information to help guide consumers to "fair and safe" loans. They also plan to participate in mortgage abuse research and publish white papers with their sister non-profit and mortgage advocacy organizations to help keep mortgage lenders fair and safe for everyone. They will also establish the "Fairness Forum", a social community where borrowers can share information with other lenders in a safe environment. The goal is to help consumers "blow the whistle" on unfair practices.
The Executive Director is Howard Banker, a 30-year mortgage industry veteran, whose most recent position was Vice President of the Opportunity Finance Network. Mr. Banker has also worked for Bank of NY Mortgage Company, Neighborhood Housing Services of America, Low Income Investment Fund, Ford Foundation, Parodneck Foundation and others. Howard Banker also serves as the Managing Director of Energy Programs Consortium, a nonprofit research and implementation organization working for states and with the federal government around scalable energy efficiency finance programs. The Chair of the Board is Janis Bowdler, Deputy Director of the National Council of La Raza. Janis is an active Huffington Post blogger and an Hispanic financial advocate. Janis most recently spoke at the White House on improving access to credit for Hispanic borrowers. Other board members include Jon Rogers of the Federation of Appalachian Housing Enterprises, Cliff Rosenthal of the National Federation of Community Development Credit Unions, and Lisa Hall of the Calvert Foundation.
The New York Times and several other large publications wrote about the organization, calling it "...a mortgage watchdog group." [3]
The Los Angeles Times called the Fair Mortgage Collaborative "...a new website to help consumers save on mortgages and closing costs." [4]
Inman News cited the Fair Mortgage Collaborative as "...a good site to help consumers find fairly priced loans." [5]
Market Place spoke to Howard Banker, Executive Director of the Fair Mortgage Collaborative and home mortgage expert, about how the Fair Mortgage Collaborative sniffs out bad lenders. [6]
Predatory lending refers to unethical practices conducted by lending organizations during a loan origination process that are unfair, deceptive, or fraudulent. While there are no internationally agreed legal definitions for predatory lending, a 2006 audit report from the office of inspector general of the US Federal Deposit Insurance Corporation (FDIC) broadly defines predatory lending as "imposing unfair and abusive loan terms on borrowers", though "unfair" and "abusive" were not specifically defined. Though there are laws against some of the specific practices commonly identified as predatory, various federal agencies use the phrase as a catch-all term for many specific illegal activities in the loan industry. Predatory lending should not be confused with predatory mortgage servicing which is mortgage practices described by critics as unfair, deceptive, or fraudulent practices during the loan or mortgage servicing process, post loan origination.
The Community Reinvestment Act is a United States federal law designed to encourage commercial banks and savings associations to help meet the needs of borrowers in all segments of their communities, including low- and moderate-income neighborhoods. Congress passed the Act in 1977 to reduce discriminatory credit practices against low-income neighborhoods, a practice known as redlining.
Herbert Sandler was a co-CEO of Golden West Financial Corporation and World Savings Bank. He died on June 4, 2019, at the age of 87. Golden West Financial's lending practices had Time Magazine include Sandler and his wife Marion in their list of the "25 People to Blame for the Financial Crisis".
Bank of America Home Loans is the mortgage unit of Bank of America. In 2008, Bank of America purchased the failing Countrywide Financial for $4.1 billion. In 2006, Countrywide financed 20% of all mortgages in the United States, at a value of about 3.5% of the United States GDP, a proportion greater than any other single mortgage lender.
A mortgage broker acts as an intermediary who brokers mortgage loans on behalf of individuals or businesses. Traditionally, banks and other lending institutions have sold their own products. As markets for mortgages have become more competitive, however, the role of the mortgage broker has become more popular. In many developed mortgage markets today,, mortgage brokers are the largest sellers of mortgage products for lenders. Mortgage brokers exist to find a bank or a direct lender that will be willing to make a specific loan an individual is seeking. Mortgage brokers in Canada are paid by the lender and do not charge fees for good credit applications. In the US, many mortgage brokers are regulated by their state and by the CFPB to assure compliance with banking and finance laws in the jurisdiction of the consumer. The extent of the regulation depends on the jurisdiction.
A mortgage bank is a bank that specializes in originating and/or servicing mortgage loans. In the United States, a mortgage bank is a state-licensed banking entity that makes mortgage loans directly to consumers. The difference between a mortgage banker and a mortgage broker is that the mortgage banker funds loans with its own capital.
Mortgage fraud refers to an intentional misstatement, misrepresentation, or omission of information relied upon by an underwriter or lender to fund, purchase, or insure a loan secured by real property.
Mortgage discrimination or mortgage lending discrimination is the practice of banks, governments or other lending institutions denying loans to one or more groups of people primarily on the basis of race, ethnic origin, sex or religion.
The Mortgage Bankers Association (MBA) is the United States national association representing all facets of the real estate finance industry. Headquartered in Washington, D.C., MBA represents over 2,200 member companies. MBA’s membership base includes all sectors of the real estate finance industry including originators, servicers, unresidential, commercial, and multi-family arenas.
The U.S. subprime mortgage crisis was a set of events and conditions that led to a financial crisis and subsequent recession that began in 2007. It was characterized by a rise in subprime mortgage delinquencies and foreclosures, and the resulting decline of securities backed by said mortgages. Several major financial institutions collapsed in September 2008, with significant disruption in the flow of credit to businesses and consumers and the onset of a severe global recession.
The Mortgage Industry Standards Maintenance Organization(MISMO) is a not-for-profit, wholly owned subsidiary of the Mortgage Bankers Association (MBA) responsible for developing standards for exchanging information and conducting business in the U.S. mortgage finance industry. It has more than 175 member organizations representing a cross-section of the residential and commercial mortgage industries.
The New York State Banking Department was created by the New York Legislature on April 15, 1851, with a chief officer to be known as the Superintendent. The New York State Banking Department was the oldest bank regulatory agency in the United States.
American Financial Services Association (AFSA) is a trade association for the U.S. consumer credit industry headquartered in Washington, D.C. AFSA’s 450 members include consumer and commercial finance companies, vehicle finance/leasing companies, mortgage lenders, credit card issuers, industrial banks and industry suppliers. AFSA is a founding member of Americans Well-informed on Automobile Retailing Economics. Bill Himpler currently serves as the President & CEO.
Self-Help is a national community development financial institution headquartered in Durham, North Carolina. Between the years of 1980-2017, Self-Help reportedly provided over $7 billion in financing to 146,000 families, individuals and businesses. It aims to drive economic development and strengthen communities by providing financial services, lending to individuals, small businesses and nonprofits. It also aims to develop real estate and promote fair financial practices across the nation. Through its credit union network, Self-Help serves 150,000 members in North Carolina, California, Illinois, South Carolina, Virginia, Wisconsin and Florida.
The Center for Responsible Lending (CRL) is a nonprofit organization research and policy group based in Durham, North Carolina, United States. Its stated purpose is to educate the public about financial products and to push for policies that curb predatory lending. On its website and elsewhere, CRL describes its mission as that of "protecting homeownership and family wealth by working to eliminate abusive financial practices." CRL is affiliated with the Center for Community Self-Help.
The mortgage industry of the United States is a major financial sector. The federal government created several programs, or government sponsored entities, to foster mortgage lending, construction and encourage home ownership. These programs include the Government National Mortgage Association, the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation.
The 2007–2008 financial crisis, or Global Financial Crisis (GFC), was a severe worldwide economic crisis that occurred in the early 21st century. It was the most serious financial crisis since the Great Depression (1929). Predatory lending targeting low-income homebuyers, excessive risk-taking by global financial institutions, and the bursting of the United States housing bubble culminated in a "perfect storm".
Chris Larsen is an American business executive and angel investor best known for co-founding several Silicon Valley technology startups, including one based on peer to peer lending. In 1996, he co-founded the online mortgage lender E-Loan, and during his tenure as CEO E-Loan became the first company to freely provide consumers' FICO credit scores. By 2000, E-Loan's market value was estimated at $1 billion In 2005, Larsen left the company when it was sold to Banco Popular. In 2006, he co-founded Prosper Marketplace and he served as CEO until 2012. Later in 2012, he co-founded the company Ripple Labs, Inc., which developed Ripple, software that enables the instant and direct transfer of money between two parties.
Doug Naidus is an American businessman who is the founder and chief executive officer of World Business Lenders, LLC.
The Dodd–Frank Wall Street Reform and Consumer Protection Act was created as a response to the financial crisis in 2007. Passed in 2010, the act contains a great number of provisions, taking over 848 pages. It targets the sectors of the financial system that were believed to be responsible for the financial crisis, including banks, mortgage lenders, and credit rating agencies. Ostensibly aimed at reducing the instability that led to the crash, the act has the power to force these institutions to reduce their risk and increase their reserve capital.