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On January 31, 2008, the Home Defense Program’s Karen Brown met with Federal Reserve Board Chairman, Ben Bernanke, and Federal Reserve Governor, Randall Kroszner, regarding proposed amendments to the FRB’s regulation of mortgage loans. In response to the FRB’s request for public comment on the proposal, the National Consumer Law Center requested a meeting, and Chairman Bernanke agreed. Karen accompanied three NCLC attorneys (Elizabeth Renuart, Alys Cohen, and Diane Thompson) and another legal services attorney (Jessica Attie of South Brooklyn Legal Services) to the meeting.

Karen described the devastating foreclosure crisis in the metropolitan Atlanta area, showing the governors the phonebook-sized listing of the 7,000 families facing foreclosures in the metro-Atlanta area in February. She explained that a high percentage of foreclosures involve mortgage loans made in the past year or two years, many of them adjustable rate mortgages where the borrower could not afford the initial teaser rate. Karen told the stories of four ALAS clients (seniors and disabled homeowners on low, fixed incomes) to whom major national banks and mortgage lenders knowingly made mortgage loans without regard to the borrower’s ability to pay the loans. Karen and the other consumer advocates made recommendations about how the FRB could strengthen its proposal to more effectively protect homeowners from predatory lending practices.

Bernanke and Kroszner spent more than an hour with the group. Chairman Bernanke listened, was engaged, asked questions, and thanked the advocates for their comments. After the public comment period closes in March, the FRB will review all comments before issuing a final regulation.