Miami-Dade Legislative Item
File Number: 073692
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File Number: 073692 File Type: Resolution Status: Adopted
Version: 0 Reference: R-1390-07 Control: Board of County Commissioners
File Name: URGE FED. RESERVE BD. TO RESTRICT USE OF ADJUSTABLE INT. RAT Introduced: 12/13/2007
Requester: NONE Cost: Final Action: 12/18/2007
Agenda Date: 12/18/2007 Agenda Item Number: 14A2
Notes: Title: RESOLUTION URGING THE FEDERAL RESERVE BOARD TO RESTRICT OR CONTROL THE USE OF ADJUSTABLE INTEREST RATES; ELIMINATE OR RESTRICT PREPAYMENT PENALTIES; REQUIRE ESCROWS FOR TAXES AND INSURANCE FOR SUB-PRIME LOANS
Indexes: NONE
Sponsors: Audrey M. Edmonson, Prime Sponsor
Sunset Provision: No Effective Date: Expiration Date:
Registered Lobbyist: None Listed


Legislative History

Acting Body Date Agenda Item Action Sent To Due Date Returned Pass/Fail

Board of County Commissioners 12/18/2007 14A2 Adopted P

County Manager 12/14/2007 Additions 12/18/2007

County Attorney 12/13/2007 Assigned Thomas H. Robertson 12/14/2007

Legislative Text


TITLE
RESOLUTION URGING THE FEDERAL RESERVE BOARD TO RESTRICT OR CONTROL THE USE OF ADJUSTABLE INTEREST RATES; ELIMINATE OR RESTRICT PREPAYMENT PENALTIES; REQUIRE ESCROWS FOR TAXES AND INSURANCE FOR SUB-PRIME LOANS

BODY
WHEREAS, the sub-prime lending industry has grown rapidly in Miami-Dade County during the last few years; and
WHEREAS, some mortgage brokers and sub-prime lenders aggressively market high-cost home loans that borrowers are unable to repay and engage in other unfair credit practices that strip retirees and working families of the equity they have in their homes; and
WHEREAS, approximately 80% of sub-prime loans have adjustable interest rates that will increase after two years; and
WHEREAS, sub-prime lenders have made these adjustable rate mortgages without regard for whether the borrower will be able to afford the payments after the rate increases; and
WHEREAS, many borrowers with adjustable rate sub-prime loans were never given a choice between an adjustable or fixed rate or were promised a fixed rate but given an adjustable rate; and
WHEREAS, approximately 70% of the sub-prime loans were refinancing loans for families who had already bought a home; and
WHEREAS, more than two-thirds of sub-prime loans have prepayment penalties, compared to just 2% of prime loans; and
WHEREAS, prepayment penalties trap borrowers into sub-prime loans with high or adjustable rates and strip their equity; and
WHEREAS, less than half of all sub-prime loans include taxes and insurance in the monthly payment; and
WHEREAS, many borrowers of sub-prime loans want to have their taxes and insurance included in their monthly payment, and many borrowers have been mislead to believe their payment includes taxes and insurance; and
WHEREAS, many borrowers end up in foreclosure when they have to make a lump sum payment of their taxes and insurance; and
WHEREAS, these practices are commonly referred to as "predatory lending"; and
WHEREAS, these predatory loans have led to an increase in foreclosure rates which hurts the families who are losing their homes as well as the neighborhoods where there are a concentration of foreclosed homes; and
WHEREAS, these vacant homes attract crime and cost Miami-Dade County money in crime prevention and the deterioration of neighborhoods; and
WHEREAS, many families have not had an opportunity to modify their loans to make them affordable; and
WHEREAS, the federal Home Ownership and Equity Protection Act (HOEPA) instructs the Federal Reserve Board to protect consumers from predatory lending (15 U.S.C. 1639(L)(2)) ; and
WHEREAS, any regulations issued by the Federal Reserve would have the same effect as law and would cover all mortgage lenders in the country,
NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF COUNTY COMMISSIONERS OF MIAMI-DADE COUNTY, FLORIDA, that this Board:
Section 1. Urges the Federal Reserve Board to enact regulations that: A) Restrict and/or regulate the use of Adjustable Rate Mortgages in the sub-prime market; B) Eliminate or restrict the use of prepayment penalties; and C) Require the use of escrow accounts for the collection of money to pay for taxes and insurance on sub-prime mortgages.
Section 2. Directs the Clerk of the Board to transmit certified copies of this resolution to the Chairman of the Federal Reserve Board.
Section 3. Directs the County's federal lobbyists to advocate for the issues identified in section 1 above, and directs the Office of Intergovernmental Affairs to include this item in the 2008 federal legislative package.



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