New “Fair and Safe” Lender Certification
As the costly burden of predatory lending and mortgage foreclosures continues to ravage families and neighborhoods across the United States, the “Fair Mortgage Collaborative” (FMC) was launched Wednesday by mortgage lenders, foundations (including the Ford Foundation and Calvert Foundation), and advocacy organizations (such as the National Council of La Raza) to promote the use of fair and safe lending practices and its certification program.
The Fair Mortgage Collaborative is a nonprofit membership organization whose members are individually and collectively committed to homeowners and homebuyers access to mortgages with the consumers best interests at its core, at a fair rate of compensation.
Lending organizations — including Boeing Employees Credit Union/Prime Alliance System, the Federation of Community Development Credit Unions, Federation of Appalachian Housing Enterprises, Inc., Mortgage Grader and Clearinghouse CDFI — are among those electing to become certified and offer mortgages that meet FMC’s rigorous certification standards.
The Collaborative also includes loan counseling and lending networks (including NeighborWorks America) and secondary market intermediaries (such as Neighborhood Housing Services of America).
FMC will identify and certify for-profit and nonprofit lending organizations that adhere to fair and safe lending standards and allow certified lending organizations to use a “Fair and Safe” certification logo to market themselves in their communities and nationwide.
What the Certification Mark Means
Lending Organizations that display this mark have been certified as Fair and Safe in their services to consumers.
The Lending Organizations that achieve this certifying mark have received a thorough review of all lending, loan counseling and loan purchase processes, all the loan products to be delivered to consumers, all the fees charged to the consumer and all the related services provided to the consumer in helping to understand, select and become qualified for a quality mortgage loan.
Prohibited Products
FMC certified lending organizations will not participate in origination or marketing of any loans with the following features:
- First mortgage loans with balloon payments of less than 10 years
- Loans with prepayment penalties other than FHA loans or loans funded by public agencies
- Negatively amortizing loans other than reverse mortgages
- No documentation loans
- Stated income loans
- Credit insurance offered by an institution affiliated with loan broker or lender
- Credit insurance for which the borrower has not separately signed a disclosure stating that such insurance is optional
- Credit Insurance for more than the principal amount of the loan
Certification standards are availabe on the FMC website. For more, see FMC Standards.
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