- Originally published in The Washington Post on March 25, 2005 Copyright 2005 The Washington Post
By Sandra Fleishman, Washington Post Staff Writer
Consumer
advocates are bringing out big names from the civil rights world to try
to keep a lending industry-backed bill on predatory mortgage lending
from rolling through Congress the way recent bankruptcy legislation
did.
NAACP Chairman Julian Bond,
the Rev. Jesse L. Jackson and Wade Henderson, executive director of the
Leadership Conference on Civil Rights, and their groups are joining
with consumer groups to oppose a bill introduced earlier this month by
Rep. Robert W. Ney (R-Ohio), chairman of the House Financial Services
housing subcommittee, and Rep. Paul E. Kanjorski (D-Pa.), the senior
Democrat on the capital markets subcommittee.
The civil rights leaders and the head of the National Fair Housing
Alliance are expected to issue a statement today urging Congress to
reject the Ney-Kanjorski proposal. The Post obtained a copy of the
statement yesterday.
"Representatives
Ney and Kanjorski have failed to provide meaningful protections in
their mis-named 'Responsible Lending Act,' " Bond said in the
statement. "Their bill demonstrates a failure to address the real pain
caused by predatory lending and the harm it is doing to African-American families."
The strong words seem to take the long-running debate over how to crack
down on predatory lending back to where it has been for years, with a
deadlock between lenders pushing for federal preemption of tougher
state laws and consumer and civil rights groups arguing that proposed
GOP fixes are too weak. The new twist this year, however, is that
Democrat Kanjorski and three black Democrats on the committee have
co-sponsored the bill with Ney.
Kanjorski yesterday said that he had expected criticism but that he
hopes a bill can be crafted that meets the concerns of the groups and
helps protect home buyers and lenders. But, he said, the current
situation is driving lenders out of states with strict laws. "There has
been a very long attempt to find something that's workable, and this is
a start," he said in a phone interview. "But right now it's a disaster
out there with every state having a different approach" to regulation.
The civil rights groups contend that the Ney-Kanjorski approach falls
far short of what is needed to stop abusive lending targeted at
minorities, the elderly and immigrants and instead removes protections
in existing federal law and in state and local regulations. The states
and local jurisdictions have been passing laws since about 1999 as
lending to subprime, or higher-risk, borrowers has exploded. Although
not all subprime lending is predatory, complaints about abusive
lending, with hidden or excessive fees and deceptive practices, have
skyrocketed as higher-cost, subprime loans have become available.
Subprime lending now accounts for about 20 percent of the mortgage market, with about $500 billion in new loans last year.
Consumer advocacy groups, including the Consumer Federation of America,
the Center for Responsible Lending, the National Consumer Law Center,
the National Association of Consumer Advocates and the U.S. Public
Interest Research Group, are backing a bill by House Financial Services
ranking Democrat Barney Frank (Mass.) and North Carolina Democrats Brad
Miller and Melvin Watt, who leads the Congressional Black Caucus. That
bill is modeled on tough legislation passed by North Carolina in 1999.
It does not preempt state laws.
Industry groups contend that preemption is required to eliminate what they say is a patchwork of state and local laws.
Among those supporting Ney-Kanjorski as a strong "first step" are the
Mortgage Bankers Association, the National Association of Mortgage
Brokers, the Bond Market Association, the American Securitization Forum
and the National Home Equity Mortgage Association, which represents
about 80 percent of what it terms the "non-prime" market.
Consumer groups have painted the Ney-Kanjorski bill as intolerable and an "evisceration" of state and federal protections.
Earlier this month, a coalition of those groups released an analysis
saying that the legislation has too many loopholes and would hurt
borrowers.
That analysis is
"misleading," and the 126-page bill is not only strong but much tougher
than the industry would like, said lending industry lobbyist Wright
Andrews, executive director of the Coalition for Fair and Affordable
Lending, which says it represents more than a third of the subprime
industry. "It fails to recognize many of the strong provisions in the
bill and overstates and grossly misstates what the laws around the
country say."
Hearings are expected this spring, Kanjorski said yesterday.