Recognizing predatory practices is only the beginning of the fight, say experts

DENVER-A workshop held here during the National Federation of Community Development Credit Unions' 26th annual meeting focused on current trends in the predatory mortgage market and the payday loan business. Tony Hernandez, director of the local office of Fannie Mae, defined predatory practices as standard mortgage practices "taken to an extreme," especially in the absence of a borrower's understanding, that can result in their paying higher costs. He identified the most fraudulent practices and noted that ethical lenders are taking steps (as are regulators) to stem such deceptive methods. Fannie Mae is pushing the "Mortgage Consumer Bill of Rights" a five-point creed that includes: access to mortgage credit; the lowest cost for which a consumer is qualified; to know the true cost; to be free of regulatory burden and the right to know how a lender makes a decision. Elizabeth Renuart, a staff attorney with the National Consumer Law Center, Boston, spoke of the regulatory and legal challenges used to fight predators. She recently completed a project for AARP which researched state payday loan laws. "Payday lenders snuck around the country," Renuart said, "getting usury laws changed in 23 state legislatures." She advocated for a federal usury cap. Marty Belin of Self Help CU, Raleigh-Durham, N.C., related how the CU formed a coalition to pass a state law against predatory lending after seeing a "big spike in foreclosures." She informed that many borrowers who are ripped off by predators are deceived into thinking they "got a good deal... but a few years down the road, they realize it wasn't as good as they thought." Angie Garcia heads up Freddie Mac's anti-predatory lending effort as manager within its Housing and Industry Outreach Department. Garcia said that Freddie Mac had ceased buying loans in which insurance was paid up front through financing (a typical predatory practice) and asked that credit unions start reporting low income members' payments to all three credit bureaus. -caburger@cutimes.com