Nonprofit’s motives questioned after $15M donation
March 25, 2008 | Center for Responsible Lending, North Carolina, industry critics, states | Comments (0)Business Journal of the Greater Triad Area of North Carolina reports on the Center for Responsible Lending.
“The good guy image of the Center for Responsible Lending, a Durham nonprofit that has emerged as a high-profile advocate on consumer issues, is being scuffed up by a $15 million donation from hedge fund investor John Paulson.
Paulson and his New York-based Paulson & Co. have made billions by short- selling subprime mortgage-backed securities, an investment strategy that bets the price of the securities will head downward.
At issue now is an effort in which the Center for Responsible Lending, or CRL, lobbied on behalf of a change to U.S. bankruptcy law that would give bankruptcy judges the authority to lower the values of first-time mortgages in the settlements they write in cases that come before them.
The power, currently being debated in Washington, D.C., while a boon to consumers, would lower the value of the bond packages that include these mortgages — a benefit to investors who take short positions.
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