While the DC Department of Insurance, Securities and Banking (DISB) cannot completely remove the problem, it has taken some major steps toward helping consumers deal with the economic fallout from the subprime mortgage lending market. 
 
Since 2007, at the beginning of the subprime lending mortgage crisis, the agency has sought ways to assist District residents using various multilayered approaches. The agency used a blitz of publicity, seminars, workshops and consumer alerts and tips to keep District residents informed about their options and their rights.
 
The surge of subprime mortgage lending caused by reductions in loan underwriting standards led to problems including loan defaults and foreclosures in the District of Columbia. Subprime loans are those that have higher costs (such as higher interest rates) than prime mortgage loans primarily due to low income, poor credit histories, high loan-to-home value ratios or other underwriting factors that would disqualify them from being eligible for lower cost, prime rate mortgage loans. Because of the nature of these loans, and many subprime borrowers, a significant number of home foreclosures were unavoidable since the income levels needed to support the mortgage never existed in many cases, according to DISB Commissioner Thomas E. Hampton.
 
On June 30, DISB released a study, “Subprime Mortgage Lending in the District of Columbia,” that it commissioned from several nonprofits. The study revealed that subprime loans disproportionately went to single, low- and moderate-income households in wards 4, 5, 7 and 8. It showed that those who had subprime or high-cost mortgages were more likely to be delinquent, which resulted in more home foreclosures in certain wards.
 
The agency had been targeting these more vulnerable populations with its public forums on subprime lending and mortgage default prevention. The agency also hosted several mortgage-related information sessions and workshops where staff handed out information, and helped consumers with their mortgage-related problems.
 
As the financial-service regulator for the District of Columbia, DISB is committed to protecting consumer interests without stifling any communities’ access to capital. Due to the broad preemptive power of federal regulators, state laws that address predatory lending and other aspects to protect consumers have limits to the mortgage lenders and brokers under our regulatory authority. DISB can, however, continue to enhance its consumer education and outreach efforts so consumers have a better understanding of the true consequences of certain loans and that mortgage lenders are held accountable for failure to disclose fully the loan terms and their impact on individual consumers.
 
“It is our intention to continue providing District residents with the tools they need so they will protect their assets,” Hampton added. “Throughout this year and the next, we will continue addressing this issue to ensure greater awareness and protection of consumers from losing their assets and life savings.”
 
To that end, the agency recently created a Foreclosure Mitigation Kit, which it released to the public mid-July. It is targeted to District residents who may be having trouble keeping up with mortgage payments, or who may be facing foreclosure of their homes, and it was a direct response to the findings of the subprime lending study.
 
The kit is a step-by-step guide for consumers on what to do if they are facing foreclosure. In easy-to-understand language, it describes what happens during the pre-foreclosure and foreclosure phases, loan refinancing, how to prevent foreclosure, and what to do after the home has been saved. The kit also includes several pieces of materials from federal government agencies such as the Department of Housing and Urban Development and the Federal Reserve Board. The agency will give several kits to the constituent services offices of the Council of the District of Columbia. Also, it may be found on the agency’s website at disb.dc.gov.
 
Since DISB regulates mortgage lenders among other financial industries, Hampton would like to take the opportunity to encourage residents with any subprime mortgage lending questions or concerns to contact DISB at (202) 727-8000.
 
“We want to make sure that our consumers are aware of their options, even when facing foreclosure, and understand they can always call DISB with any questions or issues related to mortgage lending or any financial services in general,” he added.

For consumers having problems with their mortgages, please contact DISB at (202) 727-8000 and ask for the Banking Bureau.