Definition of predatory lending a moving target, says NASCUS

ARLINGTON, Va. - Most financials and state and federal regulators agree predatory lending exists and is widespread, but measuring the prevalence of the abusive practice is proving to be more difficult to ascertain. The definition of predatory lending is in the eye of the beholder, NASCUS officials wrote in a letter to the House Subcommittee on Financial Institutions and Consumer Credit. Such a lack of definition makes it difficult to determine to what extent these types of practices are ongoing or to collect data. Weaknesses in current law and regulations also cultivate the continued practice of predatory lending, says NASCUS. The federal Alternative Mortgage Transactions Parity Act (Parity Act/AMTPA), for example, was enacted by Congress in 1982 to encourage variable rate mortgages and other creative financing to stimulate credit. Since the Parity Act preempts state law and state regulation, state regulators are helpless to contain violators of the practice. In Sept. 1999, the NASCUS regulatory and council boards adopted a policy position with regards to predatory lending. In addition to directing NASCUS management to keep member credit unions and regulators apprised about the association's growing concerning predatory lending, the boards also asked member credit unions to work with the industry to draft and promote regulations and legislation applicable to predatory lending, and to "put NCUA on notice that the state credit union system is examining this issue." Earlier that year, as part of the association's mission to be a clearing house of information for state-chartered credit unions, NASCUS developed and sent a Fringe Banking Survey to the 48 state regulatory agencies. The survey was designed to ascertain: the prevalence of pawnshops, car title lenders, postdated check lenders, check cashers, and mortgage lenders operating in the agencies' respective states under special statute or a general business law; whether these businesses are allowed to operate across state lines; whether these operations are regulated by a state agency. ekingoff@cutimes.com