Predatory lending

Sub-prime lending
The regulation of predatory lending can be controversial. It can be difficult to draw the line between providing credit to those who would not otherwise qualify and making unscrupulous loans. Many legitimate mortgage lenders are engaged in fair and legal sub-prime lending, while other companies are taking advantage of vulnerable borrowers. This problem is one of the most important issues to our local affiliates.

Protecting homeowners from predatory loans
The Center for Responsible Lending reports that 2.2 million homeowners with high-interest mortgages have either lost their homes or will lose them in the coming years. The nationwide study contributes the recent rise of foreclosures to:

• Adjustable rate mortgages with steep built-in rate and payment increases
• Prepayment penalties
• Limited income documentation
• Lack of escrow for taxes and insurance

African American and Hispanic homeowners are particularly affected because a large majority of them take out sub-prime loans. Among other factors, these groups have poor credit histories and limited access to other loan products.

Education is the key
To protect potential homebuyers, our affiliates educate them on the realities of predatory loans. We strongly support the expansion of financial literacy and homeownership counseling programs that teach consumers responsible borrowing practices.