Activists Seek Fix in Mortgage Disclosure

Proposals look to increase transparency and limit conflicts of interest in housing market

By James Hyatt 

The mortgage crisis is rapidly becoming an issue for the 2008 proxy season, as activists press for more disclosure on mortgage practices and risks.

One of the broadest efforts has been launched by the Laborers’ International Union, which has drafted shareholder proposals for submission to 28 corporations, aimed at “restoring confidence and accountability to the mortgage industry and housing market.” 

One set of proposals, aimed at financial service and mortgage holding companies such as Lehman Brothers and Washington Mutual, would require full discussion and disclosure of types of mortgages bought and sold and their underlying value. Other proposals seek to limit and disclose conflicts of interest between credit rating agencies and mortgage buyers and sellers; and others seek information on succession plans and executive compensation policies to determine whether “orderly succession plans for leadership are in place,” Union General President Terence M. O’Sullivan said.

The campaign already is gaining some traction. The U.S. Securities and Exchange Commission has refused to grant a “no action” ruling to homebuilder Beazer Homes, which had sought to exclude the proposal from its proxy statement as a matter dealing with ordinary business or irrelevant to its operations. A laborer’s union spokeswoman said Toll Brothers homebuilders had been granted “no action” status on a proposal concerning succession planning. Eleven other companies so far are seeking permission to exclude the various proposals.