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Michigan CEO testifies at state mortgage industry hearing
NORTHVILLE TOWNSHIP, Mich. (2/5/08)--A credit union CEO testified Jan. 29 before the Michigan House Appropriations Investigations Subcommittee during a hearing about tighter state regulation on home lending. Large prepayment penalties contributed to many homeowners going into foreclosure, said Robin Frucci, president/CEO of Lansing Automakers FCU. He said the penalties make it difficult for borrowers to refinance subprime mortgages at affordable rates. Some lenders require the penalties to make up for the cost of providing mortgages at below-market rates in initial years, he said (Michigan Monitor Feb. 4). “You could look at regulating pre-payment penalties or banning them altogether,” he said, acknowledging that lenders would then have to come up with new options. Credit unions have done a good job in offering loans without those penalties attached, he said. “We’re responsible for what we put borrowers into,” he said. “When they’re not dealing with financial institutions they’re dealing with someone who may or may not be there.” Foreclosures affect the homeowners, their neighbors and the community’s property values. When asked if tighter regulations would help, Frucci said appropriations should be put on lenders. He encouraged lawmakers to license, test, and provide continuing education for mortgage brokers and loan originators, who do not have as much invested in the industry as traditional financial institutions, such as credit unions, according to the Monitor. Michigan has the third-highest foreclosure rate in the nation. A video of Frucci’s testimony is available on the Michigan Credit Union League’s YouTube channel. To view, use the link.
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