ALBANY, N.Y. - Legislation designed to expand the number of loans restricted from predatory practices was introduced in the New York Assembly on Wednesday.

The bill would label as "high-cost" any loan carrying an interest rate of 5% over the weekly average yield on a one-year U.S. Treasury security, or points and fees of over 5% of its value.

Under banking regulations instituted in October in New York, a high-cost loan is one that carries an interest rate of more than 8% over the yield of a U.S. Treasury with a maturity comparable to the loan maturity.

Bill Ferris, state legislative representative for the American Association of Retired Persons, which supports the bill, said it would increase the number of loans originated in the subprime market that would have to abide by the measure.

The bill would prohibit all loans that meet the high-cost criteria from engaging in many practices identified with predatory lending, such as financing of lump-sum credit insurance; unaffordable balloon payments; leveling of prepayment penalties against borrowers who try to pay off their loans early; and mandatory arbitration clauses, which critics say deny borrowers access to the court system in the event of a loan dispute.

In addition, the bill would provide consumers with affirmative defenses when faced with foreclosure proceedings.

The bill is sponsored by Assemblywoman Aurelia Greene, a Democrat from Bronx County and chairwoman of the Assembly Banking Committee. Its co-sponsors include Assemblyman Steven Englebright, a Democrat from Suffolk County, chairman of the Assembly Aging Committee.

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