With more than 30 state and local governments entertaining legislation to combat abusive lending practices -- not to mention several different proposals floating around Capital Hill in Washington -- it's no wonder the mortgage industry feels persecuted.

Of course, some of the heat is well deserved. After all, more than a few unsuspecting borrowers have lost their homes at the hands of predatory lenders or paid fees and rates that are clearly exorbitant.

There are other ways home owners have been taken, too. But industry officials continue to maintain the accusations of widespread abuses are over-exaggerated. "It's happening," admits Wright Andrews, the chief lobbyist for the National Home Equity Lenders Association, "but not nearly as much as people say."

One of the charges that has surfaced of late is that unscrupulous lenders have targeted minorities. But Andrews says government data proves that's just not so. In fact, he says, it shows that the racial and ethnic mix of subprime lending is weighted more heavily towards whites than the general population.

Subprime is the industry term for loans made to borrowers with less than sterling credit records. It's not the same thing as predatory lending, the lobbyist admits. Nevertheless, he says that information collected under the Home Mortgage Disclosure Act is proof positive there is no link between abusive practices and discrimination.

More than three out of every four subprime loans went to whites in 1988, according to HMDA data, while just 14 percent went to African Americans, only 7 percent went to Hispanics and a mere 3 percent went to Asians. By comparison, the U.S. population that year was 72 percent white, 13 percent Black, 10 percent Hispanic and 3 percent Asian.

Meanwhile, the Mortgage Bankers Association, which has maintained that the best way to prevent abusive practices is to enforce current laws, not enact new ones, will soon publish a compendium of federal, state and local laws that are already on the books and can be used to curb abuses.

The MBA expects the tome to be "a very valuable tool" in helping its members beat back the rising tide of state and local legislation, which, if enacted, will become an operational nightmare for multi-market lenders.

"We want to see more enforcement," Howard Glaser, says the MBA's chief lobbyist. "Nobody should be ahead of us on that. But making predatory practices illegal-er won't help."

In place of new legislation to protect consumers, the MBA and other mortgage interests are hoping to persuade lawmakers in Washington to simplify a process that Glaser called "a breeding ground for abuse" by allowing lenders to provide loan applicants with an up-front closing price guarantee.

"You can't beat something with nothing; you've got to have an alternative," he said.

The idea is that federal law would supersede anything state and local governments can throw at lenders. But even though there is some support for comprehensive mortgage reform among moderate Democrats and growing interest in the topic by new HUD Secretary Mel Martinez, few observers are holding out much hope for passage, at least this year.

For more articles by Lew Sichelman, please press here.

Published: April 30, 2001

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When Lew Sichelman first started writing about housing in 1969, he was the youngest real estate writer in the country. Now, 37 years later, he's one of the oldest -- and most decorated. He has been rated the top housing columnist in the country by the National Association of Realtors as well as by his peers in the National Association of Real Estate Editors. Indeed, NAREE has recognized his work on numerous occasions. One year - due to his advancing age, he can't recall which one - he earned top honors in the annual NAREE Journalism Contest in three out of the four major writing categories. It was the first time one writer has won so many NAREE awards in a single year. Known for his ability to make even the most difficult topics understandable, Sichelman also has been honored by the National Association of Home Builders and the Mortgage Bankers Association. He began providing in-depth coverage of and consumer-oriented information about housing and housing finance at the Washington Daily News, where he was real estate editor. He held that same position for nine more years at the Washington Star, which purchased the News in 1972. The Star, a so-called "writer's newspaper" which also had the misfortune of being an evening paper, was put out of its misery in 1981, and Sichelman, who had begun self-syndicating his column in 1978, decided to become a full-time columnist. Today, his column, "The Housing Scene," is distributed by United Media to newspapers throughout the country. He also is on the staff of National Mortgage News, an independent newspaper which is considered the bible of the mortgage business. And he writes for numerous other publications, including MarketWatch.com, where he answers readers questions once a week, Sports Illustrated (don't ask), RealtyTimes.com, BigBuilder and others. Sichelman is married, the father of five and grandfather of eleven.