Congress Eyes Action on Predatory Lending

WASHINGTON – CDCU champion Martin Eakes joined civil rights leaders Jesse Jackson and the head of the NAACP before Congress yesterday to call on lawmakers to pass national standards to protect subprime mortgage borrowers from predatory lending practices. Eakes, who grew up in predominantly African-American south Greensboro, N.C., told members of the Senate Banking Committee that millions of Americans will default on subprime mortgages they purchased over the last few years–a disproportionate number of them African-Americans, Hispanics or other minorities. This trend “threatens to deprive more African-American families of their homes than did Hurricane Katrina, but it will be a silent threat,” said the founder of Self Help CU, the largest and most influential community development credit union in the country, who was appearing on behalf of the credit union’s affiliate Center for Responsible Lending. Jackson, the head of Rainbow/PUSH Coalition, said “people of color are economically exploited” by predatory mortgages sold by many subprime lenders, citing statistics showing that half of African-Americans and 46% of Hispanics, but only 17% of white borrowers are in homes bought with subprime mortgages. The hearing, the panel’s second in two weeks over lending practices, made it clear that new chairman Chris Dodd, a Democratic candidate for president, will use the committee as a focal point on populist issues, like predatory lending, credit card abuse, and home foreclosures. Eakes, who helped write the anti-predatory lending bill in North Carolina, called on lawmakers to draft a national law that will bar some predatory practices and require lenders and brokers to consider a borrower’s ability to repay the loan, something they have lost their motive to do because lenders now sell most of their mortgages on the secondary market and no longer hold them to maturity.