Statement of Governor Sonny Perdue
| Wednesday, January 22, 2003 |
Contact: Office of Communications 404-651-7774
|
Regarding Standard & Poor's Decision
To Not Allow Loans Governed By Georgia's Fair Lending Act
In The Agency's Structured Finance Transactions
Atlanta - Governor Sonny Perdue announced today: "I am very concerned about Standard & Poor's (S&P) decision to no longer allow mortgage loans governed by Georgia's Fair Lending Act (GFLA) in their structured finance transactions. This issue is being handled as a top priority and my office is working closely with Georgia legislators, Georgia's Department of Banking and Finance and other experts to develop legislation as soon as possible that both protects Georgia homeowners against predatory lending practices and addresses concerns expressed by S&P."
In a news release dated January 16, 2003, S&P recently announced that effective February 1, 2003, the rating agency would no longer allow mortgage loans governed by Georgia's Fair Lending Act (GFLA) in its structured finance transactions. S&P further stated that its decision was based on a determination that:
- investors cannot be insulated from the potential liability resulting from violation of the GFLA either through credit enhancement or legal structure; and
- liability associated with non-compliance may subject depositors and trusts to liability exceeding a loan's principal balance.
Georgia's Department of Banking & Finance has not been contacted by other secondary purchasers of mortgages regarding this matter.
Added Perdue: "If home mortgage lenders are unable to sell Georgia home mortgages in the secondary market, fewer home mortgage lending options may be available for Georgia citizens, especially many first time home buyers. Fewer home lending options may also translate into higher fees for prospective homeowners."
"We also continue to discuss this important issue with S&P and other impacted entities, including some of the state's largest home mortgage lenders and those financial institutions and agencies that typically purchase secondary mortgage loans."