PHILADELPHIA, NEW YORK AND CLEVELAND-The attack on predatory lending in the home mortgage market is moving around the country, as activists pledge to keep the issue front and center and members of Congress and regulators continue to focus on its effects, pledging to take action. In late June, members of ACORN, (Association of Community Organizations for Reform Now) marched and picketed in two locations to highlight two separate aspects of the issue. In a plush Philadelphia suburb, they picketed the home of an Advanta Corporation executive, conducting a "foreclosure" of their own. They claim Advanta, which is headquartered there, is guilty of predatory lending-using aggressive and deceptive marketing tactics to target low-income and minority neighborhoods for high cost mortgages. Such targeting results in numerous foreclosures. "Today we are collecting on the debt that Advanta owes to our neighborhoods," said Maude Hurd, ACORN's National President. "This fancy house was paid for with the profits that Advanta made from ripping us off and stealing our homes." ACORN says Advanta has also defrauded Pennsylvania taxpayers by taking $4 million in tax breaks in return for which, it was supposed to create 1,000 new jobs, but instead has downsized. It sold off its credit card operation last year and is looking to sell off other divisions, including its subprime mortgage unit. On June 29th, the New Yorkers for Responsible Lending, whose members include ACORN and the National Federation of Community Development Credit Unions and the Neighborhood Economic Development Advocacy Project demonstrated outside the offices of the New York State Banking Commission's office, to protest what they called "pathetically weak" anti-predatory lending regulations. They garnered media attention because many carried inflatable shark balloons. Errol Lewis of NEDAP, and a former official of Central Brooklyn FCU, told Credit Union Times that "we felt we had to speak up and we did. The voice of the banks has made itself heard, but the Commission refused our comments to their proposed amendments." As a result, Lewis said, New York will be surpassed by other states in the anti-predatory battle. Then, on July 6, Congresswoman Stephanie Tubbs Jones (D-Ohio) held a public hearing in Cleveland that was attended by hundreds of her constituents, many of whom offered their own experiences with predatory lenders. "Our main goal was to educate residents so that they become aware of these practices," Congresswoman Tubbs Jones told Credit Union Times. "If people are not aware, they could walk right into it." Tubbs Jones added that she'd very much like to see credit unions take a more visible part in the effort. She also said that "Not every subprime lender is a predator, but every predatory lender is a subprime lender." She added that many problems originate with dishonest home improvement loans, but that deceptive and/or fraudulent practices occur in other areas as well, like home improvement and get rich quick schemes, etc. All these share the common ground of targeting unsophisticated, or financially uneducated people. "I have been dealing with predatory lending legislation in the Banking and Financial Services Committee in the Congress. This is an issue specific to inner city and lower income areas, and directly affects many of my constituents." She promised to continue the fight. Also present were NCUA Chairman Norman E. D'Amours, Patricia Sturdevant, executive director and general counsel with the National Association of Consumer Advocates; Ron Isaac, an attorney for the Federal Trade Commission; Donna Gambrell, deputy director for the Federal Deposit Insurance Corporation; Jim Nabors, representing the National Association of Mortgage Bankers; Ron Frederick, an attorney in Cleveland, and Rita Haynes, manager of Faith United CU. D'Amours highlighted the role CUs play in bringing cooperatively-based financial services to underserved areas, and said that they are "highly unlikely" to engage in such practices directly, owing to that structure and their philosophical history. He admitted proudly to using the "bully pulpit" to urge more of them to include low-income neighborhoods in their fields of membership. NCUA has also been working with the NASCUS Task Force (NASCUS was the first credit union trade association to take on the topic publicly) on its data gathering efforts. Finally, NCUA supports and encourages risk based lending in order to extend credit and service (through CUs) to credit-damaged Americans. D'Amour also repeated his pledge, made originally during the National Federation of Community Development Credit Unions annual meeting in Denver in June, to seek budgetary support for as many as 60 economic development specialists. Rita Haynes told Credit Union Times that she was encouraged to see so many people in attendance (estimates ranged from 200-300) and noted that representatives from Bethany Baptist Church CU (where Tubbs Jones is a member) and Cory Baptist Church CU were there. Credit unions in low-income neighborhoods have been fighting financial illiteracy for a long time now, Haynes said, and many have come up with programs and products designed to counter the high-cost services offered by of others. -
caburger@cutimes.com
