DURHAM, N.C. – More than 200 national consumer advocacy groups joined 44 state Attorneys General in supporting a proposed rule change from the Office of Thrift Supervision that would block unregulated finance companies from claiming federal preemption of state consumer protection laws governing prepayment penalties. Supporters of the OTS' proposed rule estimate 500,000 American homeowners each year lose more than $1 billion to prepayment penalty abuses by predatory lenders. The advocacy groups jointly signed a letter to OTS Director James Gilleran supporting the agency's rule to change the 1982 Alternative Mortgage Transaction Parity Act. The OTS' proposed rulemaking amends the Parity Act that was passed to loosen credit restrictions at a time of high interest rates and state regulatory restrictions against adjustable-rate mortgages. In 1996, the OTS reinterpreted the act to allow unregulated finance companies to claim the prepayment penalty and late fee preemption. The result, say the consumer groups, was a dramatic increase in prepayment penalities in the subprime market. The proposed rule change restores the authority of the states and the District of Columbia to combat prepayment penalties. The groups held a teleconference briefing June 25, hosted by the Coalition for Responsible Lending and Self-Help, during which time six speakers outlined the problem and why the OTS rule amendment is important to protecting consumers' equity in their homes. Speaking during the briefing were: North Carolina Attorney General Roy Cooper; Chris Saffert from the Association of Community Organizations for Reform Now; Maria Rodriguez, a resident of New Jersey who was a victim of prepayment penalties; Roy Green, a national representative for the AARP; Michael Roster, executive vice president, World Savings; and Eric Stein, spokesman, Coalition for Responsible Lending. "The OTS' proposed rule change will close the loophole taken advantage of by unregulated finance companies," said Stein during the teleconference. "We applaud the OTS initiative." Attorney General Cooper called prepayment penalities by predatory lenders "one of the worst predatory lending activities." He said these types of payments, "punish homeowners for hard work and success." Prior to being North Carolina Attorney General, Cooper was a state senator. In that role, he helped write the state's predatory lending law. He called it "the most comprehensive predatory lending law in the country." Among the provisions of the law, it prohibits prepayment penalties on loans under $150,000.