FRB: Federal Reserve Bank of Chicago - June 7, 2006 - Transcript

Building Sustainable Homeownership:
Responsible Lending and Informed Consumer Choice

Federal Reserve Bank of Chicago
230 South LaSalle Street, Chicago, Illinois 60604
June 7, 2006

Agenda | Transcript

Pages 1-25 | 26-50 | 51-75 | 76-100 | 101-125 | 126-150 | 151-175 | 176-200 | 201-225 | 226-250 | 251-267

Transcript	Line	Page
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THE FEDERAL RESERVE BOARD	8	1
BUILDING SUSTAINABLE HOMEOWNERSHIP:	9	1
RESPONSIBLE LENDING AND INFORMED CONSUMER CHOICE	10	1
PUBLIC MEETING	11	1
Federal Reserve Bank of Chicago	12	1
230 South LaSalle Street	13	1
Chicago, Illinois 60604	14	1
Wednesday, June 7, 2006	15	1
8:30 a.m.	16	1
	17	1
	18	1
	19	1
	20	1
	21	1
	22	1
	23	1
	24	1
ATTENDEES:	1	2
	2	2
GOVERNOR MARK W. OLSON	3	2
Board of Governors of the Federal Reserve System	4	2
	5	2
MR. LEONARD CHANIN	6	2
Associate Director	7	2
Division of Consumer and Community Affairs	8	2
	9	2
MS. SANDRA BRAUNSTEIN	10	2
Director	11	2
Division of Consumer and Community Affairs	12	2
	13	2
MS. PAULETTE MYRIE-HODGE (Panel 1)	14	2
Assistant Vice President	15	2
Supervision and Regulation	16	2
Federal Reserve Bank of Chicago	17	2
	18	2
MS. ALICIA WILLIAMS (Panels 2 & 3)	19	2
Vice President, Economic Research Department	20	2
Federal Reserve Bank of Chicago	21	2
	22	2
	23	2
	24	2
PANELISTS:	1	3
PANEL 1:	2	3
MS. DIANE THOMPSON	3	3
Attorney, Land of Lincoln Legal Assistance	4	3
Foundation	5	3
	6	3
MR. THOMAS JAMES	7	3
Deputy Attorney General, State of Illinois	8	3
	9	3
MR. DANIEL LINDSEY	10	3
Supervisory Attorney, Home Ownership Preservation	11	3
Project, Legal Assistance Foundation of	12	3
Metropolitan Chicago	13	3
	14	3
MR. GEOFF SMITH	15	3
Project Director, Woodstock Institute	16	3
	17	3
MR. JAMES NABORS, II	18	3
National Association of Mortgage Brokers	19	3
	20	3
MR. MICHAEL WILLIAMS	21	3
Vice President for Legislative Affairs, The Bond	22	3
Market Association	23	3
	24	3
MR. WRIGHT ANDREWS	1	4
National Home Equity Mortgage Association	2	4
	3	4
PANEL 2:	4	4
MR. SCOTT MASON	5	4
Director, Structured Finance Ratings, Residential	6	4
Mortgage Backed Securities, Standard & Poor's	7	4
	8	4
	9	4
MR. KENNETH POSNER	10	4
Managing Director, Specialty and Mortgage Finance,	11	4
Morgan Stanley	12	4
	13	4
MR. ANTHONY PENNINGTON-CROSS	14	4
Senior Economist, Federal Reserve Bank of St. Louis	15	4
	16	4
MR. KEITH ERNST	17	4
Senior Policy Counsel	18	4
Center for Responsible Lending	19	4
	20	4
MR. ROBERTO QUERCIA	21	4
Associate Professor, Department of City and	22	4
Regional Planning, University of North Carolina at	23	4
Chapel Hill	24	4
	1	5
MR. MICHAEL STATEN	2	5
Distinguished Professor and Director, Credit	3	5
Research Center, Georgetown University	4	5
	5	5
PANEL 3:	6	5
MR. DAVID ROSE	7	5
Director of Research and Technology, National	8	5
Training and Information Center	9	5
	10	5
MR. MICHAEL SHEA	11	5
Executive Director, ACORN Housing Corporation	12	5
	13	5
MR. BRUCE GOTTSCHALL	14	5
Executive Director, Neighborhood Housing Services	15	5
of Chicago	16	5
	17	5
MS. HEIDI COPPOLA	18	5
Vice President and Director, Public Policy and	19	5
Issue Management, Citigroup	20	5
	21	5
MS. LORETTA ABRAMS	22	5
Vice President for Consumer Affairs, HSBC	23	5
	24	5
GOVERNOR OLSON: It's 8:30, we can get	1	6
started. I suspect that people will be drifting in	2	6
and out over the course of the day, but we are	3	6
looking forward to a very full and free discussion	4	6
as these issues always tend to generate. Time is	5	6
precious, so we will want to get started.	6	6
I'm Mark Olson from the Federal	7	6
Reserve Board in Washington DC. We have a couple	8	6
Fed colleagues with me this morning. Leonard	9	6
Chanin, who is Associate Director of the Consumer	10	6
and Community Affairs. Sandra Braunstein, the	11	6
Director of Community Affairs. We have Paulette	12	6
Myrie-Hodge, from Supervision and Regulation here	13	6
in Chicago. And it may appear that we are playing	14	6
tricks on you, but Alicia Williams -- Alicia, will	15	6
you identify yourself -- also with the Consumer	16	6
Affairs here in Chicago, will be part of our	17	6
panel.	18	6
Welcome, Diane. I was just	19	6
commenting that we will be introducing the	20	6
panelists in a moment.	21	6
There are a couple of rules that we	22	6
have instituted. As you know, in Washington DC,	23	6
the House of Representatives is a large, very	24	6
diverse group. Let me back up.	1	7
The Senate. The Senate thinks of	2	7
itself as a group that does not need to have a	3	7
great deal of rules. They think of themselves as	4	7
exclusively gentlemen and gentlewomen and not in	5	7
need of a great deal of rules. So chaos tends to	6	7
prevail in the Senate.	7	7
The House is under no illusion. So	8	7
they have a lot of rules, and it seems to run a lot	9	7
better.	10	7
We are sort of half way between	11	7
here. We've decided the rules make a certain	12	7
amount of sense. In part because we want to make	13	7
sure that the time is well used, and in significant	14	7
part because at the end of the program today is	15	7
when we have our open mike to allow people who are	16	7
not on the panels to have a chance to speak.	17	7
So for our panel members this	18	7
morning, we are going to ask each of them to have	19	7
an opening statement. And the opening statement	20	7
will be five minutes, which will be timed by the	21	7
two timekeepers sitting right out in front, so you	22	7
can watch carefully how that time goes.	23	7
When you are speaking on issues that	24	7
you're familiar with and that you feel strongly	1	8
about, five minutes goes very quickly. And I know	2	8
that from personal experience and I know that from	3	8
watching. So it is not that we think that you're	4	8
abusive of time privileges, it's just that we think	5	8
we are being respectful.	6	8
This first panel will go from 9:00 to	7	8
10:30. We may get started earlier, and if we get	8	8
started earlier, that's just fine. But then we	9	8
will take a break. We will have a second panel.	10	8
We will then break for lunch and have a third.	11	8
Then at 3:00 o'clock without fail we	12	8
will leave that hour for comments from people from	13	8
the audience. Those of you who would care to	14	8
speak, that will be a three minute time	15	8
opportunity. It will also be timed. And we ask	16	8
that you sign in. Now, where are they -- who is	17	8
accommodating --	18	8
MS. BRAUNSTEIN: It's outside of the room.	19	8
GOVERNOR OLSON: It's outside the room. If you	20	8
care to speak during that time, we'll do some other	21	8
reminders, but if you care to speak during that	22	8
time please sign in and we will then recognize you	23	8
for that purpose.	24	8
Are there any other house rules that	1	9
we need to talk about before we move on?	2	9
MS. BRAUNSTEIN: Maybe just how this little	3	9
timer works here.	4	9
GOVERNOR OLSON: A yellow light comes on when	5	9
it's two, and then the red light comes on at five	6	9
and you're done, okay.	7	9
The HOEPA hearings are a	8	9
continuation. Actually, four years ago was the	9	9
last time that the HOEPA hearings were held. And	10	9
in that four years it's hard to imagine that as	11	9
much change could have taken place in the industry	12	9
as has taken place. And so we are going to be	13	9
doing a series of four HOEPA hearings now around	14	9
the country.	15	9
The purpose of the hearings are	16	9
threefold. The first purpose of the hearing is to	17	9
have a determination of the extent to which the	18	9
HOEPA regs that were passed in '02, were put in	19	9
place in '02, are effective. And we will be	20	9
hearing from a number of groups about that.	21	9
The second purpose of it is to look	22	9
at the growth of the nontraditional loan product.	23	9
The nontraditional loan product is certainly the	24	9
most significant change that has taken place in the	1	10
marketplace during that interim period, and it has	2	10
raised some real issues with respect to the	3	10
mortgage industry. It has certainly allowed for a	4	10
great deal of flexibility and has brought a lot	5	10
more dollars into the home loan market. But it has	6	10
also raised some fundamental issues. So that is an	7	10
issue that we will want to look at carefully.	8	10
The third thing that we want to talk	9	10
about is the channels the mortgage product is	10	10
delivering, because that is a very significant	11	10
issue. And as the mortgage product continues to	12	10
grow and as there are more players in the	13	10
marketplace, that is a significant change that we	14	10
will want to take into consideration.	15	10
The four goals for the program, two	16	10
very hard goals and probably one that I would	17	10
describe as more of a soft -- two that are probably	18	10
softer but equally important. The first goal is to	19	10
look at whether or not there needs to be an	20	10
update. Whether or not we need to make changes in	21	10
the HOEPA regs and the threshold amounts that were	22	10
in place in '02.	23	10
The second thing, the second	24	10
objective is to review Reg Z. That will be also	1	11
one of the goals of this and one of the objectives	2	11
of this session.	3	11
The two softer ones, one is to	4	11
determine whether or not there are going to be some	5	11
areas of further education that we would like to --	6	11
any additional education that we can do from the	7	11
standpoint of the Fed.	8	11
And the fourth would be to identify	9	11
areas that might be important targets for further	10	11
research.	11	11
So I think that is an ambitious	12	11
agenda. But in a time of significant change, I	13	11
think that is very important.	14	11
There are four key constituencies, if	15	11
you will, or four key variables in the home loan	16	11
phenomenon. And those participants have differing	17	11
but important areas of responsibility.	18	11
The first, of course, is the	19	11
consumer. In a world of free markets and in a	20	11
world of free choice, you begin with a presumption	21	11
that the consumer is responsible for his or her own	22	11
actions. That has to be a fundamental statement	23	11
that is made as we consider the fact that there is	24	11
a wide range of products that are available and a	1	12
wide number of choices. You can't provide an	2	12
environment where those kinds of choices and those	3	12
kinds of options exist without a fundamental	4	12
presumption that the consumer is responsible for	5	12
their own choices.	6	12
Number two is the lender. And I'm	7	12
going to spend a few minutes -- maybe not minutes,	8	12
but a little while talking about that, because I	9	12
think that that is so critical.	10	12
Some of you know and some of you have	11	12
heard me say that I was in the banking industry for	12	12
about 16 years. During that period of time I was	13	12
never in the mortgage lending business, but over	14	12
those 16 years I was probably involved in closing	15	12
maybe 100 mortgage loans. So I thought in a	16	12
relative sense I knew a lot about the mortgage	17	12
business and closing mortgage loans.	18	12
Yet every time I have sat down to	19	12
close my own mortgage loan, I have felt at a	20	12
disadvantage in terms of my understanding. So I	21	12
can imagine what a first time home buyer and a	22	12
first time recipient of a mortgage loan would feel	23	12
when they are confronted by all of the issues and	24	12
all of the choices and all of the paperwork.	1	13
There is a fundamental asymmetry in	2	13
knowledge that is built into that process between	3	13
the mortgage originator and the provider of the	4	13
mortgage and the recipient of the mortgage, and	5	13
that can't change. That will always be the case.	6	13
So there is a real responsibility	7	13
with the mortgage lenders, I think, not to be	8	13
abusive of that process. To make sure that they	9	13
are recognizing that asymmetry and they are	10	13
providing to a great deal the extent of appropriate	11	13
education, the appropriate explanation, the	12	13
appropriate assistance in choices that takes place	13	13
with that product.	14	13
Now, I would also say that in most	15	13
cases with most mortgage products over the years	16	13
there has been a check and balance that has been	17	13
built into the system in this respect. The	18	13
mortgages for the most part have been carefully	19	13
underwritten. And the significant development that	20	13
has taken place in the mortgage market over the	21	13
years, and I'm talking now over a 20-year time	22	13
horizon, was the development of the secondary	23	13
market. It was that secondary market that provided	24	13
access to a wider range of funding for the mortgage	1	14
product. And that wider range of funding has	2	14
brought more people into the marketplace, has	3	14
allowed for homeownership for a wider number of	4	14
people than could have taken place without it.	5	14
And historically, that secondary	6	14
market was a conforming product. Was a	7	14
Fannie-Freddie conforming product typically, and	8	14
that Fannie-Freddie conforming product was very	9	14
carefully underwritten.	10	14
Today with the new nontraditional	11	14
products and the voracious appetite of the	12	14
secondary market for that product, it is not as	13	14
clear that we have that same check and balance,	14	14
that the underwriting is done as carefully. That	15	14
the market is taking into consideration the same	16	14
ability to pay and the same risk aversion that had	17	14
been the case before.	18	14
I don't know that for sure, I'll have	19	14
to be honest with you. We've looked at that very	20	14
carefully, and we wonder. We ask the question is	21	14
risk appropriately measured in the secondary	22	14
market?	23	14
That's why we have here on some of	24	14
our panels some of the secondary market	1	15
participants that can help us understand that.	2	15
Because that has, on the one hand, significantly	3	15
widened the opportunities for mortgages, but it	4	15
brings in certain questions with respect to risk.	5	15
So that I think will be a fundamental focus of our	6	15
discussion here.	7	15
Group number three that is of	8	15
interest are the community groups and the consumer	9	15
advocacy groups. It's so clear from our	10	15
perspective, and I speak I think on behalf of my	11	15
Fed colleagues, and it is also clear from my	12	15
background in the banking industry, that the	13	15
consumer groups, and particularly the community	14	15
groups, are very close to that market in a way.	15	15
Especially in the emerging markets and the low-mod	16	15
marketplace where the education needs to take place	17	15
and where the opportunities to use financial	18	15
products provide such a positive opportunity, but	19	15
at the same time if those products are not used	20	15
well, you could so easily get into a deep hole that	21	15
is very difficult to get out of.	22	15
And working in partnership with the	23	15
consumer and the community groups, this makes	24	15
tremendous sense for everybody, so the ability of	1	16
that group to provide education, to provide a	2	16
feedback actually. And I think we are going to	3	16
hear from a lot of community groups today who will	4	16
help do that.	5	16
The fourth group who has an ownership	6	16
interest in this whole area is, of course, the	7	16
regulators, and that's why we are here. We are the	8	16
rule writers. In almost all cases it's Congress	9	16
that gives us a directive. We rarely, if ever,	10	16
initiate rules. Congress tells us, gives us the	11	16
outline, the framework, just as they have done with	12	16
HMDA and they have done with HOEPA and Reg Z and a	13	16
lot of others, and it is our responsibility to	14	16
write the rules. And that's why we are here.	15	16
A number of my other Fed colleagues	16	16
are here, Jane, Jim. Would those of you -- would	17	16
my Fed colleagues please raise their hands and	18	16
identify themselves. Okay. So we don't have you	19	16
outnumbered yet, but you have us outnumbered only	20	16
by about three to one so far. So I'm sure that	21	16
more people will be coming in.	22	16
Again, for those of you who are still	23	16
coming in, welcome to these sessions. We're	24	16
proceeding on schedule, and we hope if we can even	1	17
get a jump on the start time, we would like to do	2	17
that.	3	17
We will be hearing from three	4	17
panels. And then at 3:00 o'clock today those of	5	17
you who would like to speak that were not on one of	6	17
the panels, we would ask you to sign in and we are	7	17
going to do that in three minute increments	8	17
beginning at 3:00 o'clock.	9	17
Sandy, anybody else, is there	10	17
anything else we need to say at the front end of	11	17
the process?	12	17
We will then begin with the	13	17
panelists. And we will go clockwise starting with	14	17
Jane. And if you would please just introduce	15	17
yourself briefly.	16	17
Starting with Diane. It was a senior	17	17
moment there, Diane. I apologize for that. And	18	17
identify yourself. And if you would, then, the	19	17
group you're with and your five minute statement.	20	17
And then after the five minute statement, then we	21	17
will get questions from our panel here and an	22	17
opportunity for interaction.	23	17
MS. THOMPSON: Good morning. Thank you,	24	17
Governor Olson and Fed staff. I'm very glad to	1	18
have the opportunity to be here. My name is Diane	2	18
Thomas. I'm a legal services lawyer and I work in	3	18
East St. Louis where I primarily represent low	4	18
income homeowners who are threatened with the loss	5	18
of their home.	6	18
We have seen in the last ten years an	7	18
unbelievable rise in the amount of destructive home	8	18
mortgage lending. The communities have literally	9	18
been devastated. I think it's fair to say that	10	18
there is probably not a block in the city of East	11	18
St. Louis in which one or more homes have not been	12	18
foreclosed. Many of those homes sit vacant for	13	18
years. It's a terrible, terrible blight on the	14	18
community.	15	18
The typical client we now see in our	16	18
office is a young working couple or a single	17	18
mother. Some elderly people on fixed income, but	18	18
many first time home buyers. By and large, we are	19	18
seeing first time home buyers who are being put	20	18
into adjustable rate mortgages, typically at	21	18
interest rates higher than what they're eligible	22	18
for. So they are being up-sold on the interest	23	18
rate, often by a couple of points.	24	18
We're seeing adjustable rate	1	19
mortgages that start in this climate with the	2	19
teaser rate of anywhere between 10 to 12 percent	3	19
interest rate. That's a teaser rate. They	4	19
typically, once they are fully indexed, will go up	5	19
to something like 14 percent.	6	19
There is very paltry and inadequate	7	19
disclosure. Most of the people I see that are	8	19
buying these don't understand they have an	9	19
adjustable rate mortgage. They don't understand	10	19
how much it's going to go up, they don't understand	11	19
what the index is, and they have no idea what the	12	19
maximum payment is going to be.	13	19
We have cases in our office where the	14	19
maximum payment could easily be more than the	15	19
current income of the family. And in many cases,	16	19
the fully indexed rate would be 60 or 70 percent of	17	19
the family's current income.	18	19
There is one case recently of a	19	19
client in our office who ended up in one of these	20	19
homes. She had been in public housing. She was	21	19
working and she wanted to buy a home because she	22	19
wanted to put her family on a better footing.	23	19
The center gets the call. They get	24	19
them out of the neighborhood that public housing	1	20
was in, to build pride in homeownership. She ended	2	20
up in a house that had many problems, one of her	3	20
children ended up with lead poisoning. And the	4	20
mortgage itself was very, very destructive. In a	5	20
recent deposition she testified that she wished	6	20
she'd never moved out of public housing. That her	7	20
life had been better when she was in public housing	8	20
than it was as a homeowner.	9	20
I have clients that sit in my office	10	20
every day and tell me that they now tell all of	11	20
their friends that they should never become	12	20
homeowners. That being a homeowner is a trap, it	13	20
is a downward spiral.	14	20
There is something seriously wrong	15	20
with our system when I see every year close to 100	16	20
families come through my door who determine that	17	20
homeownership is a trap. And that homeownership	18	20
for them, instead of decreasing the wealth gap	19	20
between whites and blacks, has only served to	20	20
increase it.	21	20
I think there are two reasons we have	22	20
seen this explosion of devastation. The first	23	20
Governor Olson has already alluded to, which is we	24	20
have lost meaningful underwriting in many	1	21
circumstances. Many of the loans I see would never	2	21
have been made if there were thorough and	3	21
responsible underwriting. The ARMS that I see, if	4	21
you read in the pooling service agreement, it says	5	21
in the pooling servicing agreement that they	6	21
weren't underwritten for even the fully indexed	7	21
rate, let alone the maximum rate. There is no	8	21
attempt to determine whether or not these loans	9	21
when they index upwards in two years are going to	10	21
be able to be paid.	11	21
There is no residual income test.	12	21
And if you're making loans to people who are low	13	21
income, a family of four who is earning $1200 a	14	21
month, you can't assume that 50 percent of that	15	21
income is going to be available for principal and	16	21
interest without seeing how much more they are	17	21
going to have to pay for utility costs, for taxes,	18	21
for insurance, and then allowing something so that	19	21
they can eat and put clothes on their children's	20	21
backs.	21	21
I think that one of the reasons that	22	21
we have see this dearth of underwriting is the lack	23	21
of assigning liability, and the difficulty of	24	21
assigning liability in those situations where it	1	22
is. The only place where we see meaningful	2	22
assignment of liability is in HOEPA loans. Even	3	22
that in Illinois has had to be hard fought over and	4	22
over again.	5	22
What that means is that Wall Street	6	22
has been, I think, very good at pooling these loans	7	22
and pricing the risks so that investors in the	8	22
aggregate are not losing money on these loans. But	9	22
homeowners are not given the same kind of	10	22
disclosures that Wall Street investors are.	11	22
One very obvious example is the	12	22
pooling servicing agreement that I mentioned. They	13	22
talk about how they haven't done the underwriting	14	22
for the fully indexed rate. The homeowners all	15	22
believe that that has been done, and it's not.	16	22
GOVERNOR OLSON: Thank you very much, Diane.	17	22
Thomas James.	18	22
MR. JAMES: Good morning, and thanks --	19	22
GOVERNOR OLSON: Could you pull the microphone	20	22
over.	21	22
MR. JAMES: Sure. Good morning and thanks for	22	22
inviting me. Diane is always a very hard act to	23	22
follow, and I will keep my comments short as she	24	22
said everything I wanted to say.	1	23
I think one of the things that --	2	23
GOVERNOR OLSON: Could you identify the group	3	23
that you represent?	4	23
MR. JAMES: Sure. I'm with the Illinois	5	23
Attorney General's Office. So we are the police	6	23
and regulatory of the state apparatus.	7	23
I was one of the chief authors of our	8	23
High Risk Home Loan Act, a mini-HOEPA that we have	9	23
in effect here in Illinois that really shadows	10	23
HOEPA in a lot of ways. Except that we tweaked it	11	23
to lower the triggers to 5 percent on these	12	23
points. And where we saw most of the -- where we	13	23
see or we did see historically most of these used.	14	23
And I want to say that HOEPA and I	15	23
think our Act have been entirely effective in	16	23
shutting down that abuse. So that I think less	17	23
than 1 percent of loans that are written today are	18	23
HOEPA or high home -- High Home Loan Risk Act	19	23
susceptible.	20	23
So I encourage you to look at HOEPA	21	23
and to tweak it more. I think the triggers can	22	23
come down to the levels that we have in Illinois	23	23
easily to shut down the front end abuse that we see	24	23
in fees and points.	1	24
And I want to say that one of the	2	24
side effects has been that the abuses have been	3	24
pushed into other areas. Particularly structural	4	24
areas, in the way loans are structured. Foremost	5	24
among those are prepayment penalties, teaser rates	6	24
that end before the prepayment penalties end.	7	24
Margins that are never disclosed to consumers,	8	24
margins over the index rate. And then, of course,	9	24
the ARM.	10	24
And the ARM is really the source of a	11	24
tremendous amount of abuse in the marketplace.	12	24
People simply don't understand how the mechanism	13	24
works. And they don't understand how the indexes	14	24
fluctuate, they don't understand that they are	15	24
written into loans with an initial rate below which	16	24
their loan will never descend.	17	24
So I encourage the Board, the Fed, to	18	24
look at the structural abuses that are -- that	19	24
consumers have no chance.	20	24
Yesterday I was in a training session	21	24
with 11 experienced lawyers and I handed out the	22	24
current disclosures that are given with ARMS. And	23	24
I gave everybody three minutes to read those	24	24
disclosures. Then I gave them five minutes to read	1	25
those disclosures. And then at ten minutes, I	2	25
called time. And there wasn't an individual in	3	25
that room who could explain to me the nature of a	4	25
transaction that they would engage in as lawyers	5	25
were they to go through with that loan.	6	25
So in the disclosure areas we work in	7	25
an atmosphere of basically total failure. We don't	8	25
know how to communicate the nature of the products	9	25
to the consumers.	10	25
And if you go, if you flip in the	11	25
commentary to the disclosures, the ARM disclosures,	12	25
they're completely laughable. First of all, we are	13	25
in an age of technology where we can and we have	14	25
forced Ameriquest to give the real deal when the	15	25
deal goes down. They have to give the real figures	16	25
at the point where the consumer is making the	17	25
choice to buy. And that comes before the closing,	18	25
it comes at the sale of the loan. And the sale	19	25
comes with the push marketing, and that comes with	20	25
the first contact. Particularly in under-served	21	25
communities where banks don't exist historically.	22	25
So at that initial contact when the	23	25
offer is made, the real figures have to be given.	24	25

McCorkle Court Reporters, Inc., Chicago, Illinois, 312-263-0052

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2006 Hearings

Building Sustainable Homeownership: Responsible Lending and Informed Consumer Choice

Federal Reserve Bank of Chicago 230 South LaSalle Street, Chicago, Illinois 60604 June 7, 2006

Building Sustainable Homeownership:
Responsible Lending and Informed Consumer Choice

Federal Reserve Bank of Chicago
230 South LaSalle Street, Chicago, Illinois 60604
June 7, 2006