Big-time mortage industry lobbyists operating in the Beltway made sure that the risky home loan lending practices train kept a-rollin', all the way to the brink of a major U.S. economic disaster... all in the name of "protecting" ignorant borrowers rights' (Quotes excerpted from WSJ, Dec 31, 2007)
".... State legislatures wanted to crack down on so-called predatory lending, which refers to the use of deceptive or unfair practices in the sale of high-interest loans, often to low-income borrowers who can't afford them. In New Jersey, for example, lawmakers passed a strong predatory-lending law in 2003 that made it difficult for Ameriquest to continue doing business there."
[At left, Ameriquest lobbyist Wright Andrews: paid millions by the mortgage industry to protect ignorant people's right to
be victimized by predatory home-loan lending practices.]
"Washington lobbyist Wright Andrews and his wife, Lisa, coordinated much of the industry's lobbying. Mr. Andrews's firm, Butera & Andrews, collected at least $4 million in fees from the subprime industry from 2002 through 2006, congressional lobbying reports indicate. Mr. Andrews didn't represent Ameriquest directly. He ran three different subprime-industry trade groups: the National Home Equity Mortgage Association, of which Ameriquest was a member; the Coalition for Fair and Affordable Lending, which spent $6.3 million lobbying against state laws before it dissolved earlier this year, according to federal filings; and the Responsible Mortgage Lending Coalition."
[Buyer beware: ABC News' Investigation of Ameriquest chief Roland Arnall, the recently appointed Ambassador to the Netherlands (contributed largely to Bush campaign)]
".... Ameriquest was founded by Mr. (Roland) Arnall in 1979 as Long Beach Savings & Loan. He later shed all of the thrift's operations except its retail-mortgage unit, which he renamed Ameriquest. During the refinancing boom of the 1990s, Ameriquest became a player in the business of lending to low-income homeowners. The company persuaded many homeowners to take cash out of their houses by refinancing them for larger amounts than their existing mortgages. Many of the new loans carried relatively high interest rates."
".... Last year, ACC Capital, its parent company, agreed to pay $325 million to settle regulators' claims that it charged excessively high mortgage rates and didn't adequately disclose loan risks."
Oops. Oh well, as Mr Andrews says, Who knew? Well, maybe Wright Andrews' wife knew a little.
"Mr. Andrews's wife, Lisa, then head of government affairs at Ameriquest, was also focused on New Jersey. On the Web site of her Washington public-relations firm, she says that she "built a coalition of mortgage brokers, mortgage bankers, appraisers, title companies, and others involved in home mortgage lending to create a grass-roots lobbying campaign that produced 7,000 emails and faxes to state policymakers in a six-week time frame."
"In June 2004, New Jersey's Assembly and Senate unanimously passed bills that rolled back parts of the earlier law, including the tangible-net-benefit rule. Mr. Bass, the Ameriquest lawyer, announced that the company would "be offering a full range of loans in New Jersey." Thousands of New Jersey homeowners subsequently refinanced existing mortgages or took out new loans with Ameriquest before the subprime market tanked. Many of those loans are now in foreclosure."
Object lesson for Washingotn lobbyists caught red-handed: act stupid, portray yourself as one of the victims, and blame the Fed:
In the wake of the collapse of the subprime market, Mr. Andrews's subprime lobbying business has withered. The three trade groups he ran are gone, and most of his subprime clients have stopped lobbying.
"I certainly was not aware of the degree to which many in the industry clearly failed to follow proper underwriting standards -- the standards which they represented they were following to those of us who were lobbying," Mr. Andrews says.
But he also faults the Federal Reserve for letting the industry get out of control.
"Personally, I think and have long felt the Fed should have done more early on," he says. "But I don't think anybody realized the level of problems that were going to come out in the last year or two. If you had said to me the industry was going to melt down, I would have said you were absolutely insane."
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