Hunting Down The Predators

Chris Palmeri

The non-profit Center for Responsible Lending has been an aggressive crusader to stop predatory mortage brokers who prey upon poor, unsophisticated borrowers. The Durham, North Carolina-based group has successfully fought to get state legislation passed that outlaws sleezy industry tactics such as high prepayment fees and the steering of borrowers into more expensive loans. Now a detailed 34 page report released Feb. 23 shows to what extent laws on the books in states like North Carolina, Massachusetts and New Mexico have helped bring down fees and curb the abuses that have cost homeowners as much as $9 billion a year. The study of some six million loans over seven years also found that--despite the initial claims of lenders--credit for subprime borrowers did not dry up after the laws were passed. In fact the overall rates charged these borrowers went down. "We kept hearing that credit will dry up if you restrict the abuses," says Iowa attorney general Tom Miller, who led his state's crackdown on predatory lenders. "That was an excuse or worse." The study comes just as some in Congress are suggesting a national predatory lending law that might preempt and weaken state rules. Hopefully the Center's report will wind up on every congressman's doorstep.