Operation HOPE Founder and U.S. President’s Advisory Council on Financial Literacy Vice Chair John Hope Bryant Announces Growing Support for Committee’s Work at FDIC Forum on Mortgage Lending for Low- and Moderate-Income Households
Council Committee-Approved “Best Practices” on
The Future of Responsible Lending Shared with Forum Attendees
Full Council to begin its formal consideration of newly proposed “Guiding Principles”
LOS ANGELES – July 9, 2008 – John Hope Bryant, Operation HOPE (HOPE) Founder and CEO, who also serves as Vice Chair of the U.S. President’s Advisory Council on Financial Literacy, (the Council) publicly announced the first banking and financial services industry endorsements of the Committee-approved report, Recommendation of "Best Practices" for and in Respect to The Future of Responsible Sup-prime Mortgage Lending, as well as key statements of support for the overall work being undertaken by the Council Committee on the Under-Served and its special initiative on “the future of responsible mortgage sub-prime lending.” The announcements of support were made public during his remarks at the “FDIC’s Forum on Mortgage Lending for Low and Moderate-Income Households” in Arlington, Virginia on July 8, 2008.
Bryant continued, “Wells Fargo and Cara Heiden deserve special leadership credit here. As far back as 2003, they worked to stop practices that weren't responsible for the borrower. As just one example, they went on to require Wells Fargo to send a letter to every approved, broker-supplied sub-prime loan applicant, where the bank thought the borrower may qualify for a prime-priced offering. They sent this letter, copying the broker, advising the borrower that they may qualify for better rates and terms . Cara’s co-president at Wells, Mike Heid, is also a respected leader in the mortgage industry, and together Mike and Cara have made a real commitment to integrate financial literacy into various phases of Wells’ mortgage lending process. This is significant, and benefits the under-served community that our Council Committee and HOPE are so passionate about. I commend them.”
Banco Popular also fully endorsed the Committee-approved report and the bank’s CEO, Richard L. Carrión spoke at the FDIC Forum.
The Housing Policy Council of the Financial Services Roundtable issued a statement of support, saying “HPC supports the mission of the Committee which is to ensure that responsible sub-prime lending continues in the future.” HPC continued “we applaud the efforts of the Committee to reinvigorate the sub-prime market through responsible lending practices and improved financial education for consumers.”
John Reich, Director of the U.S. Office of Thrift Supervision, issued a statement of support, saying “the OTS strongly supports initiatives and policies that foster financial literacy, informed consumers, and high standards of business conduct throughout the financial services industry. Consistent with these objectives, I strongly support the efforts of the President’s Advisory Council on Financial Literacy and the Committee on the Under-Served to develop a range of practices and policy recommendations for responsible sub-prime lending. The statement continued, “The OTS is committed to lending our support to this important work. Senior members of my staff have participated in discussions, including the May 28th meeting of the Committee on the Under-Served. We remain available for additional discussions and assistance as needed.”
U.S. Comptroller of the Curren cy John C. Dugan issued the following statement after the FDIC’s Forum on Mortgage Lending for Low- and Moderate-Income Households: “Today, I had the opportunity to participate in the FDIC’s Forum on Mortgage Lending for Low- and Moderate-Income (LMI) Households. At the Forum, many good ideas were discussed to encourage responsible LMI mortgage lending, including the recommendations of the Committee on the Underserved of the President’s Advisory Council on Financial Literacy. As I indicated when I recently addressed the Committee, I believe the key elements of a responsible mortgage lending product geared at LMI populations should contain four elements: (1) the product should be easy to understand and have disclosures that convey key elements of the transaction to the consumer; (2) lenders should qualify borrowers based not just on their capacity at the initiation of the transaction but over the life of the loan; (3) borrow! ers should have some equity in the transaction and be required to make a down payment using their own funds; and (4) the credit underwriting analysis should be flexible enough to evaluate “thin file” borrowers who can demonstrate their ability to repay recurring non-credit related obligations in a timely manner. I support the efforts being pursued by the FDIC and the President’s Advisory Council on Financial Literacy to ensure that mortgage products remain available for Americans of all income levels with the desire and capacity to become homeowners.”
U.S. Treasury Secretary Hank Paulson also commended the President’s Council on Financial Literacy’s efforts to address the issue of financial literacy and sub-prime lending in his closing remarks at the Forum.
Bryant concluded in his prepared remarks, “while surely these industry adoptions, endorsements and statements of support are very encouraging with respect to the now public Committee-approved report on “the future of responsible sub-prime lending,” and we encourage others to take whatever good ideas they might find useful to them (from the report and in the marketplace), Council Chairman Schwab and I are already looking forward to the next logical step, which includes introducing a broader, more policy oriented series of “guiding principles” for consideration by the full Council. This next step, which is now underway, involves the full Council review and consideration of a broader, related series of “guiding principles” (policy recommendations) around “the future of responsible mortgage sub-prime lending,” which build off of the Committee report and work.”
“We appreciate that folks are taking their own action to adopt and endorse the Council’s Committee efforts, to identify a set of “guiding principles”, particularly the mortgage industry,” said Bryant. He continued, “The Council Committee’s work helps to “signal” to the nation that Washington believes that responsible mortgage sub-prime lending should continue on some reasonable basis, to responsible less-than-prime borrowers, post-sub-prime crisis; and probably most significantly the Council’s work to include financial literacy – for the first time ever – in the mortgage lending process.”
FDIC Chairman Sheila Bair hosted the forum, which featured Federal Reserve Chairman Ben Bernanke, U.S. Treasury Secretary Hank Paulson, JP Morgan Chase CEO Jamie Dimon, and a long list of leaders and luminaries in the financial sector.
The forum was held to strengthen dialogue in the financial services and lending communities around responsible sub-prime mortgage lending, examining amongst other things, avenues which could support standards and practices in order to sustain and even expand homeownership in vulnerable communities.
Chairman Bair gave the introductory and closing remarks; Secretary Paulson provided the closing keynote, and Chairman Bernanke provided the opening keynote address. An archived viewable webcast is available at http://www.fdic.gov .
About Operation HOPE, Inc.
HOPE is a leading global nonprofit social investment banking and financial literacy empowerment organization. Through its various initiatives and its three principal programs: “Banking on Our Future” (teaching youth about financial empowerment), HOPE Coalition America (financial emergency preparedness and recovery), and the HOPE Center Banking Network (loans, bill pay, computer literacy, understanding banking principles), HOPE is at the forefront of a “Silver Rights” movement to make free enterprise and capitalism relevant to all underserved communities.
About the U.S. President's Advisory Council on Financial Literacy
The President's Advisory Council on Financial Literacy (the Council) was created on January 22, 2008 by President George W. Bush. The Council's purpose is to help keep America competitive and assist the American people in understanding and addressing financial matters. Each member of the Council represents an industry involved with the delivery of financial education to American citizens. The President and the Secretary of the Treasury have tasked the Council to work with the public and private sector to help increase financial education efforts for youth in school and for adults in the workplace, increase access to financial services, establish measures of national financial literacy, conduct research on financial knowledge and to help strengthen public and private sector financial education programs. Financial guru Charles Schwab is chairman of the Council.
About the Committee on the Under-Served of the President's Council
The Committee on the Under-Served of the President's Council (the Committee) will focus on three key tasks: (1) gathering information to better understand efforts needed to identify and to differentiate responsible and irresponsible sub-prime mortgage lending, and outlining what a responsib le sub-prime loan product looks like; (2) discussing other related issues such as proper and "common sense" clear loan disclosures and the overall context in which these products, disclosures and other related mortgage factors become active positive or negative contact points with respect to financial literacy; and (3) identifying what financial literacy initiatives are needed to address the massive levels of financial illiteracy that contributed to the current subprime crisis.