WASHINGTON - HUD Secretary Andrew Cuomo's announcement Thursday of a national task force to eliminate predatory lending met with skepticism - even from the consumer-advocate side.

"We don't need another task force," said Frank Torres, legislative counsel for Consumers Union. "We need laws. By strictly prohibiting things like balloon payments and the issuing of loans to people that can't repay them, progress can be made."

Testifying before a Senate Appropriations subcommittee hearing, Mr. Cuomo said the 14-member task force will hold public hearings in Baltimore and at least three other cities over the next eight weeks before issuing recommendations. "The economic boom which has produced the highest homeownership rate in history has a downside and that is predatory lending," he said.

Mr. Cuomo is the latest federal regulator to jump on the anti-predatory-lending bandwagon. Federal Reserve Chairman Alan Greenspan last week announced that an interagency task force of banking regulators, the Justice Department, the Federal Trade Commission, the National Credit Union Administration, and the Department of Housing and Urban Development is crafting a joint policy statement defining specific illegal practices.

Legislation is coming. Rep. John J. LaFalce, the ranking Democrat on the House Banking Committee, is expected to introduce legislation next week aimed at curtailing predatory lenders. Rep. LaFalce is negotiating with Sen. Paul S. Sarbanes, the ranking Democrat on Senate Banking Committee, to offer companion bills.

While details are still being finalized, Rep. LaFalce said in a statement that he plans to fill gaps in existing law that fail to restrict widespread abuses such as loan flipping and "excessive" financing of points and fees. It would also toughen enforcement of existing laws.

"The key issue is to strike a balance between developing effective proposals for predatory lending without hampering access to credit for the families who need it the most," the New York Democrat said.

Industry officials say they oppose abusive lending practices, but worry that the intensified focus on predatory lending by lawmakers and regulators will prompt an overreaction.

"It's important to try and put a stop to predatory lending practices, but we need to be careful that whatever is determined by the task force is narrowly focused on those predatory lenders," said Ann M. Grochala, director of bank operations for the Independent Community Bankers of America. "We need to be careful that good lenders who have fair practices should not be accidentally included in any descriptions of predatory lenders."

She added that lenders should be better represented on the task force, which sources say was hastily assembled.

Paul S. Reid, executive vice president of the Mortgage Bankers Association of America, is the only person representing lenders on the task force assembled by Mr. Cuomo. It includes a host of community group leaders such as John Taylor, president of the National Community Reinvestment Coalition, and four mayors including Chicago's Richard Daley and Detroit's Dennis Archer.

"It would be unfair if banks weren't represented in this process, because they would be the ones who would be most regulated by this action," Ms. Grochala said.

Lenders are particularly concerned that lawmakers will blur the distinction between predatory lending and legitimate subprime lending.

"I'd hate to see & our ability to provide this type of financing to people who are otherwise unable to get it negatively impacted by the activities of a very few," said Scott McAfee, president of WMC Mortgage, a Woodland Hills, Calif., subprime lender. "That would be real sad."

Mr. Reid of the Mortgage Bankers Association agreed. "There's a clear distinction between predatory and subprime," he said. "They're not synonymous."

Abusive practices are "a black eye for the industry," Mr. Reid said. "It just can't go on." If the problem is not stopped, "I think we'll have legislation. If we can't self-police our own industry we probably" deserve it.

In his testimony, Mr. Cuomo said that HUD has rid dozens of predatory lenders and thousands of unqualified appraisers from the agency's FHA program, which provides government backing for mortgage loans to lower-income borrowers. He noted that the agency bans lenders with high default rates, requires mandatory testing of appraisers, and demands detailed assessments of the physical condition of properties as part of appraisals. Mr. Cuomo proposed similar steps could be adapted to the rest of the market.

"Many of these same lenders and appraisers are in the conventional mortgage market often charging exorbitant fees, imposing onerous terms, and saddling families with debts they'll never be able to retire," Mr. Cuomo said. "We must move and move now to eliminate them from the conventional market."

Marc Hochstein contributed to this article.

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