University of Pittsburgh
August 9, 2007

MEDIA ADVISORY A Laissez-Faire Approach to Mortgage Lending Is Neither Realistic nor Warranted, Says Pitt Faculty Expert

Recent losses in the subprime market could harm the ability of financially responsible, yet credit-impaired, borrowers
Contact:  412-624-4147

PITTSBURGH-Angela Williams Foster, professor of public and urban affairs in Pitt's Graduate School of Public and International Affairs, says, "Often lost in the discussion of the subprime market is the fact that many subprime borrowers are responsibly paying back their mortgage loans. Yet, subprime loans remain a key policy issue as the housing market continues to feel the effects of a surge in mortgage delinquencies and defaults.

"Recent media attention has also highlighted that many subprime lenders have filed or are in the process of filing for bankruptcy, due to an inability to meet commitments. The recent losses in the subprime market could harm the ability of credit-impaired yet financially responsible borrowers to obtain financing and enjoy the benefits of homeownership."

A laissez-faire approach to mortgage lending is neither realistic nor warranted, Foster says. "As has been evidenced recently, many lenders have already begun self-regulation and have curbed the amount and types of loans they will originate. Greater regulation and scrutiny of mortgage loan originations is needed to identify and eliminate loans originated through fraudulent or irresponsible lending practices. Stricter lending standards should be coupled with tightened social responsibility mandates."

Foster, who earned her PhD in public policy analysis at Carnegie Melon University's

H. John Heinz School of Public Policy and Management, is the author of "Neighborhood Racial Composition and the Concentration of Subprime Mortgages," which was presented at the 28th Annual Conference of the Association of Public Policy and Management, in 2006.

For a list of Pitt faculty experts, visit http://www.umc.pitt.edu/m/experts.html

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