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Residential Department: Q&A: Ira Rheingold, National Association of Consumer Advocates: November 2007


Q&A: Ira Rheingold, National Association of Consumer Advocates

Ira Rheingold, Executive Director, National Association of Consumer Advocates

In 2004, NACA and its network of more than 1,000 attorneys successfully campaigned to have Fannie Mae and Freddie Mac stop purchasing loans with binding mandatory-arbitration clauses. Predatory lending is the consumer group’s latest cause, which Ira Rheingold tell us more about.

What can brokers and lenders do to regain trust with their clients? When we build a system where the interests of brokers are aligned with the homeowners they’re serving, then trust can be rebuilt.

The reason the mortgage industry collapsed is because it is fee-driven. Brokers and lenders were serving Wall Street, who demanded high-yield bonds, high-interest loans and high-fee loans that were not in the best interests of consumers.

Some members of the mortgage industry do not consider additional legislation to be the right fix for its current situation. Do you agree? I find that laughable. Do I think this is an industry that’s overregulated and overlegislated? No. Will I agree that there are all sorts of ridiculous disclosure requirements that exist in the lending and broker industry? Sure. I think a lot of the disclosures that we see do serve to confuse borrowers.

What would you like to see instead? Brokers should be responsible to the homeowners they claim to be serving. There needs to be an assignment of liability.

For legislation to be effective, it has to create mechanisms for the market to police itself. So when a lender funds a broker’s loan, it actually does due diligence to determine that the loan is OK. When Wall Street provides funds or buys a loan from a lender, it can’t just provide money for the loan, put its head in the sand and say, “We have no accountability if that loan was predatory.”

How can the mortgage industry enforce current legislation? Regarding the Real Estate Settlement Procedures Act, it should make good-faith estimates binding and enforceable.

Some people see consumer advocates as bad guys. Why would you say this is untrue? We just want a mortgage marketplace that works fairly. We believe that when we push for strong consumer-protection laws, those laws are really strong marketplace-protection laws. If you set standards that don’t allow the [fraudulent lenders] of the world to get a large market share based on bad behavior, it allows good lenders to increase their market share and volume.

What is your main piece of advice for brokers today? They need to not seek the lowest common denominator. Are they creating a business model that thrives on charging higher fees? Or are they building a business model that aims for long-term relationships with borrowers and long-term viability of loans? Good brokers make loans that meet the needs of consumers and are fairly priced. They should evaluate the long-term sustainability of the loans they make. 


Melinda Young was an associate editor at Scotsman Guide. For questions on this article, call (800) 297-6061 or e-mail

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