AUGUSTA, Maine -- The governor of Maine is expected to sign a bill into law that tightens requirements in order to promote responsible subprime mortgage lending.
The Maine House and Senate unanimously passed the legislation last week. "With the rampant foreclosures in the subprime market, policy leaders and responsible lenders in Maine understood the pressing need to act," Uriah King, co-author of a report that documented predatory lending abuses in Maine with the Center for Responsible Lending, said. "This law includes some of the strongest protections in the country, including common-sense ways to reduce broker abuses and destructive serial refinancing."
The new law includes a key provision that requires lenders to evaluate a borrower's ability to repay the loan and will require brokers to recommend mortgages that make sense for the borrower, while prohibiting lenders from financing points and fees in high-cost mortgages--a practice that makes it easy to strip equity from homeowners while hiding the true cost of the loan.
In addition to the state's credit unions, others in support of the bill included banks, AARP, the Maine Council of Churches, NAACP of Portland/Bangor, Four Directions Development Corporation, Maine's Community Action Programs, Coastal Enterprises, a community development corporation dedicated to expanding economic opportunities for low-wealth families and communities and over 30 additional grassroots, business and advocacy organizations.
Maine is one of more than two-dozen states that have taken action in the wake of the subprime mortgage debacle.