Affordable Housing

The headline above is a quote from former West Virginia Supreme Court Justice Richard Neely, describing what his role was as an arbitrator at the National Arbitration Forum (NAF), a for-profit company hired to enforce mandatory arbitration clauses for credit card consumer loans.  "NAF is nothing more than an arm of the collection industry hiding behind a veneer of impartiality," says Richard Neely.

In a devastating expose by BusinessWeek, Neely and other former arbitrators describe an arbitration system stacked completely against consumers-- a system where creditors win 99.8% of all disputes involving companies ranging from Bank of America to Sears to Citgroup. Arbitration clauses buried in the fine print of credit card offers means consumers lose the right to have disputes decided in an independent court and instead are forced into corporation-selected arbitration firms.

Giving into corporate efforts to protect banking interests, Minnesota Governor Tim Pawlenty vetoed SF 3396, which would have put a temporary hold on foreclosures while still requiring borrowers to make payments on their loans.  The bill would have required homeowners with a sub-prime or negative amortization loan to pay either 65 percent of the payment owed when the loan defaulted, or the minimum monthly payment when the mortgage was first created, whichever is less, for a one-year foreclosure deferment period.  The bill passed both chambers of the Minnesota Legislature with a wide margin, only to be vetoed (part of Pawlenty's record number of vetoes for a single session).  In the meantime, home foreclosures are projected to increase 39 percent this year in Minnesota, with one out of every 31 Minnesota households experiencing a foreclosure between 2005 and the end of this year.

Faced with total and continued inaction on the federal level, Maryland enacted a series of emergency measures earlier this month to combat the foreclosure crisis in the state.  

The Virginia Senate took a big step this week and unanimously approved moratorium on foreclosures for homeowner with high risk mortgages. The bill,  SB 797, introduced at the request of Governor Tim Kaine, provides a one month moratorium on all high-risk mortgage foreclosures. The measure is much needed relief for a state that has foreclosure rate increases of more than 750% in some areas.

North Carolina was the first state to pass a law reining in shady predatory lending practices, such as steep prepayment penalties, balloon payments and the sale of high-cost loans to borrowers who could qualify for lower rates. Soon a number of other states followed with similar laws and the result, according to a new study, is that homeowners now save $9.1 billion per year.