Public Comment, Subprime Mortgage Lending, National Community Reinvestment Coalition

April 30, 2007 Regulation Comments Chief Counsel’s Office Office of Thrift Supervision 1700 G Street NW Washington, DC 20552 Attention: Docket No. 2007-09, Interagency Guidance on Subprime Lending Dear Officials of Federal Bank and Thrift Agencies: The National Community Reinvestment Coalition (NCRC), the nation’s economic justice trade association of 600 community organizations, appreciates that the Agencies have proposed formal guidelines to protect against the harms of abusive subprime mortgage lending. We share your concern that subprime lending poses a serious threat to borrowers and the stability of homeownership when not used in combination with proper underwriting practices. We are specifically pleased with and support several of the proposed guidelines to set higher industry standards on underwriting, consumer protections, and portfolio management practices. At the same time, we urge you to further tighten some aspects of your advisory to incorporate advisement to prime lenders who do not practice similar guidelines regarding adjustable rate mortgage (ARM) lending. Many borrowers who took out 2/28 and 3/27 subprime loans are subject to unpredictable future costs. Predatory loans, such as these, offer two-year fixed rates and then have rates increasing at a rapid clip. These rate hikes can lead to jumps of 50% or more in monthly payments, resulting in payment shock, unaffordable loans, and default for many borrowers. Often, these same ...