Activist group to seek tougher subprime rules
NEW YORK (Reuters) - Community activist group ACORN plans to lobby U.S. states to tighten their rules on subprime lending in the wake of a crisis that saw a sharp rise in foreclosures on the home loans.
The group, which has operations in 37 U.S. states, is lobbying for regulations requiring lenders to document that potential borrowers have the ability to repay the loans they are taking out, either by documenting their income, their assets or a comparable payment history.
"Organizationally, we work on whatever level makes the most sense," Jordan Ash, director of the group, said at the Reuters Real Estate Summit in New York. "We're involved on the federal level, we're involved on the state level."
He cited Michigan, Colorado and California as places the group might aim its efforts.
Subprime lenders make loans to borrowers with less-than-stellar credit histories. In some cases, the loans were based on only the borrower's claims of income, which in some cases were falsified by borrowers or brokers.
About 50 mortgage lenders have folded due to the crisis, according to the Mortgage Bankers Association, while U.S. foreclosure rates rose 35 percent in the first quarter of this year, according to online foreclosure marketplace RealtyTrac.
