Press Release for Thursday, September 30, 1999
Ms. Floree Lowery of Asheville, NC wanted a home equity loan. She became a victim of predatory lending by United Company Lending. She was charged $3,090 in broker fees, 9.25% ($9527.50) in origination fees, and her loan violated truth in lending laws by hiding the actual annual interest rate. Ms. Lowery will tell her story at a rally at the Richmond Federal Reserve Bank in Charlotte, North Carolina, Friday, October 1 at 3:00. Community
reinvestment and fair lending advocates have organized a march and rally in support of the Community Reinvestment Act and to call for an end to predatory lending.
The rally follows a 2:00 press event at First Union Bank, then activists will march through the financial district of Charlotte to petition the Federal Reserve for help in combating predatory loans such as the one Ms. Lowery received.
"Predatory lending is economic rape. Loans like Ms Lowery's shows the heel of corporate greed planted firmly on the aspirations of people who are seeking the American dream," states Reverend Allison, Executive Director of the NC NAACP.
The Community Reinvestment Act, which requires depository institutions to meet the entire credit needs of their community, is under attack by Senator Phil Gramm, Chair of the Senate Banking Committee. "The National Community Reinvestment Coalition joins with these marchers to call for support of the Community Reinvestment Act in Congress, to strengthen, not weaken fairness in financial services," declares John Taylor, President of NCRC.
Predatory lending which disproportionately impacts minorities is of particular concern for fair housing activists. "Predatory lending treats everyone unfairly. But when protected classes are targeted for these products, then it is a violation of fair housing laws. We will pursue those lenders in violation of the law," says Stella Adams Executive Director of the NCFHC.
The march and rally is also a celebration of the passage of an Anti-Predatory Lending Law in North Carolina which is considered a national model. "We need the North Carolina General Assembly to pass a mortgage broker licensing bill which will provide greater consumer protections from unscrupulous brokers like the one in Ms. Lowery's case that charged a $3,000 broker fee despite her objections," says Peter Skillern, Executive
Director of CRA*NC.
"We call upon the Federal Reserve to evaluate subprime lenders for compliance with consumer laws," says Irvin Henderson, Chair of the Community Reinvestment Association of North Carolina. The Federal Reserve currently evaluates subprime subsidiaries of a bank holding company only for safety and soundness and not compliance with consumer laws. Activists are making five key requests from the Federal Reserve:
1. The Home Owner Equity Protection Act (HOEPA) gives the Federal Reserve the power to lower or raise the interest rate threshold between 8% and 12% above comparable Treasury rates. Reduction of the threshold disclosure rate from 10% to 8% to broaden the protections afforded by this law. This would still provide plenty of room for subprime lenders to cover their risk, but brings more loans into the HOEPA regulatory net.
2. Subsidiaries of financial institutions need to be evaluated for consumer compliance as well as safety and soundness issues. Consumer compliance is a fair housing issues as well as a safety and soundness issue. The recent problems in the subprime industry, such as the bankruptcy of United Companies Lending, are an example of how consumer compliance can effect safety and soundness.
3. Lenders should be evaluated on the loans that they purchase and securitize -- not just those they originate for compliance of fair housing laws in providing equal treatment to protected classes.
4. Federal Reserve should provide assistance in educating consumers about predatory lending practices to help consumers protect themselves.
5. Evaluation of lenders compliance with the Community Reinvestment Act should be strengthened for local and small area performances so that big dollar commitments do not obscure the actual impact at the local level.
Peter Skillern, Executive Director, CRA*NC 919-856-2170
John Taylor, President, National Community Reinvestment Coalition 202-626-8866
Stella Adams, Executive Director North Carolina Fair Housing Center 919-856-2166
Mary Ann Terry, Federal Reserve Bank of Richmond, Charlotte Branch, Public Information Officer 704-358-2494