| CHICAGO,
IL – U.S. Representative Jan Schakowsky (D-IL) today hailed the action
by the Federal Reserve to combat predatory lending. The Federal Reserve
Board of Governors adopted many anti-predatory lending policies that Schakowsky
called for in her bill, H.R. 3901, the Anti-Predatory Lending Act of 2000.
Schakowsky
and Rep. Carolyn Maloney had organized a letter signed by 26 members of
the Congressional Caucus for Women’s Issues calling on the Federal Reserve
and Chairman Alan Greenspan to use regulatory powers to curtail predatory
lending.
“I
am very pleased that Chairman Greenspan has responded to our requests and
has taken action to give homeowners and potential buyers a measure of protection
from predatory lenders. While there is more yet to do, I am looking
forward to Congress following the lead of the Federal Reserve and passing
tough federal legislation and stronger protections,” said Schakowsky, a
member of the House Banking Subcommittee on Housing and Community Opportunity.
The
Fed action encompassed three areas: lowering and expanding Home Ownership
and Equity Protection Act (HOEPA) triggers, requiring important new disclosure,
and stopping flipping and other notorious predatory lending practices.
The
Fed lowered and expanded HOEPA triggers, thus bringing more loans within
HOEPA. Specifically, it lowered the HOEPA APR trigger by 2 percentage
points. It also expanded the HOEPA fee trigger to define more items
as fees. The Fed also required an important new disclosure.
Three days before closing, lenders must disclose the difference between
what amount the borrower wanted and the actual amount that the borrower
is borrowing.
In
addition, the Fed took steps to combat loan flipping and churning.
Specifically, it will prohibit refinancing a HOEPA loan within a year unless
it can be demonstrated that the loan is in the best interest of the borrower
(ie-lower monthly payments).
Schakowsky’s
bill attacked the high triggers, single premium insurance products, loan
flipping and churning, unilateral call provisions, and loans made without
regard to the borrower’s ability to pay. |
