Predatory Lending

Dear Mayor Street, We are writing to urge you to sign the anti-predatory-lending ordinance passed by City Council 16-0 on April 5. As members of ACORN, we have been arguing for an ordinance like this one for a year-and-a-half. For much longer than that, lenders have been stripping this city's residents of their savings and their homes through unfair and abusive loans. These loans serve no useful purpose and are certainly not required in order for fair lending to take place.

A few weeks back, I wrote a brief article for the daily Business section about a complaint filed against Wells Fargo by the Pennsylvania Human Relations Commission, which accused the lender of engaging in predatory-lending practices, primarily in Philadelphia's African American neighborhoods. Wells Fargo denied the accusation and promised to "vigorously defend" itself against the commission's claim. In the days that followed, I was inundated with responses from people across the country who wanted to tell me their stories about Wells Fargo and other lenders.

IT IS commendable that Philadelphia officials are determined to do something about predatory lending, but banking regulations are determined at the state and federal level. State legislators have a responsibility to address this issue for all 67 counties, not just Philadelphia. I suggest you take your own advice and read the actual legislation. It contains the provisions you call for in your editorial (June 13). In places, it is actually more pro-consumer than what city officials are promoting.

An increasing number of Philadelphia homeowners are at risk of losing their homes and financial security because of predatory mortgage lending. The need to stop the abusive practices by a small segment of the mortgage lending industry is behind the creation of a Philadelphia Task Force on Predatory Lending, said Michelle Lewis, founder and CEO of Northwest Counseling Center, one of the city's largest nonprofit housing counseling agencies....

The Pennsylvania Human Relations Commission Tuesday accused Wells Fargo, N.A., of engaging in predatory lending practices in primarily African American neighborhoods in Philadelphia. In a complaint, the panel said that since 2004, Wells Fargo had engaged in lending practices contributing to the "disproportionately large number of foreclosures" in these neighborhoods. The complaint said Wells Fargo's "predatory practices" included charging excessive fees as well as high interest rates "not justified by the borrowers' creditworthiness.

The Street administration announced three new loan programs yesterday aimed at helping people avoid predatory lenders that could leave them with insurmountable debt and damaged credit. The mayor's Neighborhood Transformation Initiative will provide $750,000 in loan-default protection for eight banks that have agreed to participate in the programs. The programs were announced at a news conference at a North Philadelphia real estate counseling agency. Street, Councilwoman Marian B. Tasco, a vocal critic of predatory lending, and a bevy of agencies promoting proper lending practices attended.

A homeowner wanted to remodel her bathroom, and Edwin Rivera, who operated a home repair company in Philadelphia, helped her get a loan. She trusted Rivera because he spoke Spanish. He persuaded her to give him $7,000 up front for the project. Workers came to the house, ripped out the old bathroom, but never returned. They hadn't been paid because Rivera pocketed the $7,000. The woman spent the next several months showering with a garden hose in a kiddie pool in her basement. This woman was one of dozens of Rivera's victims.

Watch out when state lawmakers launch repairs on a consumer-protection law that's been in effect only weeks - particularly when they're cheered on by the very industry that's being regulated. Case in point: New Jersey's tough, new measure to protect borrowers from high-cost home loans. No sooner had the law taken effect in late November than proposals were floated in the Senate and Legislature to scale it back. That makes absolutely no sense at this early stage. This lending law takes dead aim at a serious problem - the abusive lending practices of a small but growing segment of the home loan industry.

Here's an overlooked element of an anti-blight strategy for Philadelphia: Stem high-cost loans that target homeowners in struggling neighborhoods. What about demolition crews tearing down abandoned buildings, wreckers towing junk cars, volunteers cleaning vacant lots? Good things, all. But this initiative is about keeping people in their homes before abandonment and its first cousin, blight, take over. High-cost mortgages and home-improvement loans are blamed for tripling city foreclosures since 1995.

Heartbreaking tales of lost homes, lost savings, and unethical loan officers dominated Senate hearings yesterday into troubling practices in the high-risk-mortgage industry. Four people told members of the Senate Banking Committee that their own naivete allowed deceptive lenders to stick them with high-interest loans, exorbitant fees, unnecessary insurance, and discouraging penalties for prepayment. The practices, known as predatory lending, typically target elderly, minority or uneducated borrowers with tarnished credit histories.

The Pennsylvania Human Relations Commission ordered Thomas Richter, the owner of a Bala Cynwyd lender that specialized in financing taverns, to pay $668,951 to seven borrowers "for damages, humiliation and suffering caused by illegal predatory lending," plus $10,000 in civil penalties to the state. The order was dated Oct. 24, but Richter said Tuesday that he had not seen the order and was "totally shocked" to hear about it. "I've been dealing with this case for a couple of years.

A Mortgage Bankers Association-financed study that challenged the statistical models used to accuse lenders of discrimination and predatory lending prompted me to ask you for your opinions on its findings. The study, by George Washington University economics professor Anthony Yezer, said that none of the models on which such accusations were based included the borrower as a determining factor, and that "mortgage rates and the probability of rejection are the result of choices of both the applicant and the lender.

I recently suggested here that, based on the response to an article I had written about predatory lending, few people seemed to know what it was. Of course, that brought reaction from both sides to what was simply an observation gleaned from a large harvest of e-mails and phone calls after a relatively tiny story that appeared deep inside a Wednesday Business section. To clear things up - personally, I consider even solicitations from credit card companies predatory - I provided an academic definition from the Center for Housing Studies at Harvard.

A few weeks back, I wrote a brief article for the daily Business section about a complaint filed against Wells Fargo by the Pennsylvania Human Relations Commission, which accused the lender of engaging in predatory-lending practices, primarily in Philadelphia's African American neighborhoods. Wells Fargo denied the accusation and promised to "vigorously defend" itself against the commission's claim. In the days that followed, I was inundated with responses from people across the country who wanted to tell me their stories about Wells Fargo and other lenders.

The Pennsylvania Human Relations Commission Tuesday accused Wells Fargo, N.A., of engaging in predatory lending practices in primarily African American neighborhoods in Philadelphia. In a complaint, the panel said that since 2004, Wells Fargo had engaged in lending practices contributing to the "disproportionately large number of foreclosures" in these neighborhoods. The complaint said Wells Fargo's "predatory practices" included charging excessive fees as well as high interest rates "not justified by the borrowers' creditworthiness.

Fighting predators Among the guests invited to watch President Obama sign the historic financial regulation bill into law Wednesday was Philadelphia City Council Majority Leader Marian B. Tasco. The new law includes safeguards against the types of predatory lending practices that Tasco has fought against for years. Obama was first briefed on the subject by Tasco in 2004, when he was an Illinois state senator running for the U.S. Senate. As far back as 1994, Tasco had worked with community organizations to educate city residents about the dangers of easy money offered by loan sharks.

English is the most widely spoken language on the planet for a reason: It's the most highly adaptable, capable of evolving to meet new needs in the blink of an eye. For example, just last year, offering mortgages at a cheaper-than-market teaser interest rate, with little or no money down, was known as "predatory lending. " But conditions changed - specifically, the party occupying the White House - and now we call that style of lending "national policy. " The new definition was provided by Predator-in-Chief Barack Obama last week during his daily announcement of a new bailout plan, this one for homeowners who took on mortgages they can't afford.

Soon after the New Jersey legislature passed a tough law aimed at controlling predatory lending, State Sens. John Adler (D., Camden) and Gerald Cardinale (R., Bergen) teamed up to sponsor a bill that weakened it. Adler and Cardinale said they were responding to pressure from the lending industry, which argued that New Jersey's anti-predatory lending law was so tough that it would have kept legitimate lenders out of the market. But now, as Adler runs for Congress, his Republican opponent is charging that he made those changes in 2004 because he was getting campaign cash from predatory lenders who wanted to continue to victimize vulnerable borrowers.

One would think ACORN was the acronym for some subversive Commie organization, given recent attacks on it by the Republican Party and John McCain's presidential campaign. What's the national community organization's crime? It registers people to vote. The devil, you say! We can't have too many people voting in a democracy! Especially too many of the wrong people. And the wrong people, it seems, are the many folks who live in the 110 cities, including Philadelphia, where you can find chapters of ACORN, which stands for Association of Community Organizations for Reform Now. What reforms does ACORN want?

About $23 million from a class-action settlement of predatory-lending claims against Ameriquest Mortgage Co. is being distributed among 21,500 residents of New Jersey and Pennsylvania. Ameriquest was the largest supplier of subprime loans to the Philadelphia region in 2005. Checks ranging from $172 to $6,350 in New Jersey and from $91 to $5,117 in Pennsylvania were sent out yesterday and Thursday, officials said. The money is part of a multistate $325 million lending settlement that was reached in January 2006 and that resolved allegations that Ameriquest employees deceived consumers and used high-pressure sales tactics to boost commissions.