WASHINGTON - More than 200 community lenders, advocacy groups, and investors are urging Federal Reserve Board Chairman Alan Greenspan not to back down from curbing abusive lending practices when the Fed meets today.
A joint letter, sent Monday, called on the Fed to include financed, up-front credit insurance premiums in the definition of high-cost loans covered by the Home Ownership and Equity Protection Act, which requires additional disclosure and reporting on loans with predatory characteristics.
"We believe that it is absolutely essential that the board modify the HOEPA regulations to curtail abusive lending by including financed single-premium credit insurance" and similar products like debt cancellation and debt suspension agreements "in the definition of 'points and fees,' " the letter stated.
Fed Governor Edward M. Gramlich said in a speech last Wednesday that the central bank would need more evidence of abusive lending practices before acting.
The letter was signed by various groups, including the American Association of Retired Persons, the Coalition for Responsible Lending, the Center for Community Change, and the First Affirmative Financial Network.
On Tuesday the Association of Community Organizations for Reform Now called on the Fed to include pre-payment penalties and yield-spread premiums in the definition of loan fees. In addition, the consumer group said it wants the Fed to prohibit deceptive practices that increase fees and do not benefit to the borrower, such as loan flipping or repeated refinancing.