ORLANDO, Fla. - Home equity lenders who convened here Thursday were smarting from a double-barreled volley of bad publicity from The New York Times and ABC News.

The giant news organizations on Wednesday printed and televised the results of a joint investigation into alleged abusive lending practices by First Alliance Corp. and Lehman Brothers' role in funding the Irvine, Calif., company's activities. The National Home Equity Mortgage Association, emphasizing that First Alliance is not a member, told those at its annual conference to heed the stories nonetheless.

In the public eye, "predatory lending is synonymous with subprime," said Laura Borrelli, who is finishing a three-year term as president of the trade group, most of whose members specialize in loans to subprime borrowers. She said the heat is on the industry to "de-couple" the two images.

Ms. Borrelli noted that the barrage of negative publicity came as consumer groups have been pushing for anti-predatory-lending laws in New York, Illinois, and other states, as well as at the federal level.

Delegates used electronic keypads to respond to questions from the podium, telling the trade group that, among other things, a recently passed anti-predatory-lending law in North Carolina would make it difficult for most of them to do business there.

Proposals in other states and a bill in Congress echo the North Carolina law. A majority of the trade group's members told the group it should concentrate on shaping federal legislation that would take precedence over the hodgepodge of state laws that may emerge.

The North Carolina law, which takes full effect July 2000, puts the onus on high-cost lenders to determine the "suitability" of their loans, by making sure that the borrowers have had credit counseling and can make the payments.

It prohibits these lenders from calling loans, accelerating payments, increasing interest rates after defaults, structuring loans with negative amortization, or charging fees for loan term modifications or prepayments.

Richard Gravino, the president of Provident Consumer Financial Services in Cincinnati, said his firm may quit doing business in North Carolina if the state law is not changed to make it easier to determine which loans are restricted. He urged his colleagues - who overwhelmingly blamed brokers for predatory terms - to take responsibility for the problem and nip it in the bud by refusing to fund such loans.

The home equity group also told members they face a serious competitive challenge in stepped-up subprime activity by Fannie Mae and Freddie Mac, the government-sponsored enterprises that buy home mortgage loans.

Lenders said they fear that Fannie and Freddie could hurt profitability in the industry by mispricing the risk of the subprime loans they buy. But 40% of the conference attendees said they were already selling loans to Fannie and Freddie.

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