Predatory Lending Repair
Refinancing plan for victims of property flipping in Minneapolis includes mortgage-backed securities for institutional investors.
In 2001, William Michael Cunningham, Creative Investment Research (CIR) participated in one of the first wide scale home mortgage loan modification projects in the United States. The Minneapolis-based project sought to help 50 families victimized by predatory lending practices. See article, Property Flipping Remediation Yields Investment-grade Security.
As the article notes, "In the summer of 2000, members of FHF met with the Board of Pensions of the Evangelical Lutheran Church in America to discuss how new mortgages might be financed. At the meeting, the Board of Pensions said it was looking for investments that had ERISA-compliant features, which ruled out options such as purchasing below-market mortgages. William Cunningham, Manager of Social Purpose Investing at the Board, suggested creating a Fannie Mae or Freddie Mac product.
Fannie Mae (ticker: FNM) and Freddie Mac (FRE) are government-backed corporations that purchase mortgage loans in the secondary mortgage market. Mr. Cunningham was fresh from testifying the month before on Capitol Hill regarding Fannie Mae's and Freddie Mac's lack of involvement in addressing special housing-related issues such as predatory lending.
As also stated, "Mr. Cunningham is pleased that the Board contributed to realizing a high-impact community investment. He is also excited about what Home to Stay means for future victims of such scams. 'This is a complicated process, since it is the first time that any type of investment-grade predatory loan remediation has been done,. he explained."
We also note that in 2005, Creative Investment Research served as an expert witness for homeowners in a case against PMI Group, Credit Suisse First Boston, Moody's, Standard and Poor's, Fairbanks Capital Corporation, Select Portfolio Servicing, US Bank National Association, as Trustee of CSFB ABS Series 2002-HEI, et. al., in the New Jersey Superior Court Law Division - Monmouth County. Our testimony sought to establish that the corporate parties listed above were in fact responsible for facilitating unfair and predatory lending practices.
