NCRC Press Release on Predatory Lending

NCRC Press Release

For further information contact:

John Taylor,
President and CEO or
Chris Morton,
Director of Legislative & Regulatory Affairs
(202) 628-8866

NCRC Applauds Congress¹ and Secretary Cuomo¹s Actions on Predatory Lending

Washington, DC -- Today, John Taylor, President and CEO of the National
Community Reinvestment Coalition and member of HUD's National Predatory Lending
Taskforce, applauded proposed bills that would crack down on predatory lenders.
He also pledged NCRC¹s assistance in identifying and stamping out predatory
lending.

"With the mortgage market for minority and low- and moderate-income communities
increasingly saturated with predatory lenders, too many residents of these
neighborhoods become victimized. For these borrowers, the American dream of
homeownership turns into a terrifying nightmare. There is simply no place for
these lenders and their unscrupulous and usurious practices in our financial
system," declares John Taylor, President and CEO of NCRC.

³It is heartening to see that Congress is taking notice of this widespread
problem and proposing solutions to correct it," said Taylor. "Representatives
LaFalce and Schakowsky, and Senators Sarbanes and Schumer are all to be
commended for their efforts to craft anti-predatory lending legislation."

Taylor continues, ³Secretary Cuomo is to be congratulated on HUD¹s leadership in
stopping predatory lending.² In addition to the National Predatory Lending
Taskforce, the Secretary has called for legislative action to prohibit Fannie
Mae and Freddie Mac from purchasing predatory loans, and will have HUD
scrutinize the prevalence of subprime lending in minority and low- and
moderate-income communities.

The use of predatory lending tactics that result in minority, and low- and
moderate-income homeowners being deceived and dispossessed of their property and
wealth continues to rapidly accelerate. Recent analysis done by NCRC shows that
the share of the mortgage market held by subprime lenders in minority
neighborhoods in large cities nationwide continues to be significantly higher
than the share of the mortgage market held by subprime lenders in white
neighborhoods. Given that a growing number of subprime lenders are engaging in
predatory practices, this does not bode well for residents of these communities.

Nowhere are these patterns more stark than in Baltimore, Maryland. NCRC
analysis of 1998 Home Mortgage Disclosure Act data shows that subprime lenders'
market share for home refinance loans in substantially minority census tracts
was nearly 39%, while their share in overwhelmingly white census tracts was 0%.
Fourteen of the top twenty refinance lenders in minority census tracts were
subprime lenders. For home improvement loans, subprime lenders held 27.5% of
the market in minority census tracts versus just 6.5% in white tracts. Finally,
in the home purchase market in Baltimore, subprime lenders controlled 28.7% of
the market in minority census tracts, and again 0% in predominantly white
tracts.

NCRC, working with fair lending experts and its nationwide membership, has
crafted a model anti-predatory lending bill for use by state and federal
policymakers in their efforts to fight unscrupulous lenders. Among other
things, the model bill prohibits exploitative practices associated with high
cost loans, such as continual increases in interest rates and high balloon
payments that result in increased indebtedness of the borrowers. It also
requires homeownership counseling before a borrower receives a high cost loan,
and mandates foreclosure prevention programs. The bill prohibits flipping, and
prevents a lender from making a loan for an amount substantially larger than the
appraised value of the property. Many of these provisions are included in the
various anti-predatory lending bills currently circulating in Congress.

Taylor declared, "NCRC will continue to work tirelessly to end the devastation
of foreclosure and equity-stripping that has already occurred to all too many
low- and moderate-income individuals and families throughout this country. We
commend the many organizations and individuals who have already done so much to
combat predatory lending in their communities and look forward to working with
policymakers, regulators, and others who have committed to end predatory lending
once and for all."

NCRC is working nationwide with member organizations including the Community
Reinvestment Association of North Carolina, the Woodstock Institute, the
Wisconsin Rural Development Center, and the Greater Rochester Community
Reinvestment Coalition. NCRC will continue conducting data analysis that will
help its member organizations identify reverse redlining and targeting of
minority neighborhoods by predatory lenders. NCRC¹s national financial literacy
program will expand its education efforts about predatory lending. Finally,
NCRC will continue advocating for national and state legislation to eliminate
predatory lending.

"We must act now. Left unchecked, these unsavory practices will devastate
thousands more families and communities nationwide. There is no time to waste,"
concluded Taylor.


###

The National Community Reinvestment Coalition (NCRC) is the nation's community
reinvestment and fair lending trade association of more than 700 community-based
organizations and local public agencies dedicated to increasing access to credit
and capital for traditionally underserved urban and rural areas.



This post transferred from the cdb-l mailing list