Congress Targets Predatory Lending

October 12, 2004
A bipartisan effort in Congress seeks stronger consumer protections for people with less-than-perfect credit records who want to finance homes and other big ticket purchases.

Predatory Lending • Some Payday Lenders Operate Outside U.S. Law • Payday Lenders Resist APR Comparisons • Massachusetts Settles Predatory Lending Charges For $10 Million • California Payday Lenders Target Blacks, Latinos • States Battle Feds To Enforce Lending Laws • Payday Loans Can Lead to Bankruptcy • Study Disputes Lenders' Excuses for Charging Blacks and Latinos Higher Rates • ACORN Names Money Mart "Loan Shark of the Year" • States Battle Feds Over Predatory Lending Laws • States Warn Bill in Congress Would Roll Back Predatory Lending Protections • Ney-Kanjorski Bill A Ruse, Consumer Groups Charge • Business Interests Target "Activist" Attorney Generals • Option One Agrees to Clean Up Its Lending Practices in Pennsylvania • Pennsylvania Tackles Predatory Lending • Predatory Lending Guidelines Too Vague, Consumers Group Charges • North Carolina Court Strikes Down CitiFinancial's Mandatory Arbitration • Congress Targets Predatory Lending • CitiGroup Settles Predatory Lending Charges for $215 Million • Household Settles for $484 Million • Consumers File Class Action Suit Against Household • FTC Charges Associates, Citigroup With Predatory Lending Practices

Reprepresentatives Paul E. Kanjorski (D-PA), the senior Democrat on the House Financial Services Capital Markets Subcommittee, and Bob Ney (R-OH), Chairman of the Subcommittee on Housing and Community Development, say they want to craft strong uniform national standards for subprime lenders and adopt other needed reforms to help homebuyers and homeowners.

Their comprehensive bill will respond to growing complaints about so-called predatory lending practices and conflicting state laws, as well as the need to further enhance consumer education and protections.

"I am delighted that Representative Kanjorski has agreed to work with me on this important issue and at the progress we have made in examining these matters," Ney said. "I said from the outset that I was flexible and willing to refine H.R. 833. That's exactly what Representative Kanjorski and I will be doing."

"There is a genuine need for strong uniform national lending standards with appropriate enforcement mechanisms, and it is important to build on the growing bipartisan consensus about the need to address these important issues," said Kanjorski.

Ney introduced H.R. 833, the Responsible Lending Act. The bill was the first legislation introduced in the current legislative session to address issues in the nonprime marketplace, which helps people with less-than-perfect credit to purchase homes, establish better credit records, and join the economic mainstream. Since that time, others interested in the issue of subprime lending have put forward their own proposals to address these issues.

"Many states do not have effective laws. The laws that exist are different, are often conflicting and unclear, and are sometimes too extreme, which ultimately prevents consumers from obtaining the credit they need," Ney said.

The two lawmakers said they expect to circulate their comprehensive subprime lending legislation when the Congress returns to Washington after the election.

At previous Congressional hearings of the Housing Subcommittee and the Financial Institutions Subcommittee, many Members of Congress have expressed an interest in considering such a bill. Ney and Kanjorski say that's reason for optimism their proposal will garner broad, bipartisan support and will serve as the primary House legislative vehicle for addressing these lending and consumer protection issues when the 109th Congress convenes in January 2005.

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