Shelter Shorts

NC Leads Predatory Lending Fight

In late July, North Carolina Governor Jim Hunt signed what State Attorney General Mike Easley says is the toughest predatory lending law in the nation. The bill prohibits mortgage lenders from charging exorbitant up-front fees, requiring prepayment on loans of less than $150,000, tagging additional insurance payments onto loans, and charging interest rates above a set limit. The North Carolina Fair Housing Center and the Community Reinvestment Association of North Carolina were among the groups present for the signing who had pushed for the measure, along with Attorney General Easley.

“These predatory lenders frequently target the minority community,” Easley told the Winston-Salem Journal (4/27/99). “And within the minority community they tend to go to the people with the least experience with finance.”

The fight against predatory lending is heating up elsewhere. In New York, the biggest home-equity loan company in the state, Delta Funding Corporation of Woodbury, New York, agreed to provide $6 million to restructure loans of borrowers whom State Attorney General Eliot L. Spitzer contends have been mistreated, The New York Times (6/23/99) reported. The company also agreed not to move forward immediately with imminent evictions. The Times reported that Spitzer had threatened to file a suit accusing Delta of violating the civil rights of thousands of minority residents in Brooklyn and Queens. State investigators said the company engaged in a kind of reverse redlining: blanketing minority neighborhoods with offers for home-equity loans and giving credit to people who did not need it, with terms prohibited by federal lending laws. The company handles more than $1 billion in loans in New York and 21 other states. The New York State Banking Department has issued proposed regulations to curb the more predatory and abusive practices of subprime mortgage lenders. The regulations will also ensure that borrowers receive information and referrals for counseling.

 As part of a campaign that responds to the nationwide increase in subprime mortgage lending, the Federal Trade Commission (FTC) in July settled what the agency calls the government’s first predatory lending cases. Six lenders have agreed to pay a total of $572,500 in restitution to 275 homeowners nationwide. The companies, which agreed to the settlements but did not admit to violating the law, are Barry Cooper Properties of Encino, CA; Capitol Mortgage Corp. of Provo, UT; CLS Financial Services Inc. of Lynnwood, WA; Granite Mortgage of Lexington, KY; Interstate Resource Corp. of Newburgh, NY; LAP Financial Services Inc. of Louisville, KY; and Wasatch Credit Corp. of Salt Lake City, UT. A seventh company charged is no longer in business.

According to the FTC, during 1998 subprime mortgage and home equity companies loaned $150 billion, an increase of almost 58 percent from the previous year. Stella Adams, executive director of the NC Fair Housing Center in Raleigh, told The Charlotte Observer (7/30/99) that 70 percent of the customers who suffer from predatory lenders are older than 45, and they tend to be minorities and have low incomes. Usually, Adams said, the home is the only wealth the victim has.

“They are advertising to them. They are marketing to them. This is an aggressive strategy,” Adams said. “They are farming our neighborhoods. They are preying on our communities.”

Contact:

  • Peter Skillern, Community Reinvestment Association of NC, 919-856-2170; www.cra-nc.org;
  • Christine Landgraff, NY Banking Department, 212-618-6451; or

Living Wage Movement Grows

Gaining momentum from welfare reform and workfare, community and labor activists across the country have pressed for city and county legislation that addresses the issue of corporate welfare as well. Grassroots organizations and union locals are successfully linking wage increases with the direct subsidies and special tax breaks many firms get from city governments. Over 30 local jurisdictions have passed such measures, according to ACORN and the New Party. As The Nation magazine (8/9-16/99) recently editorialized, “The living wage campaign remains one of the brightest images on the progressive radar screen.” The movement has scored some noteworthy victories of late.

In June, the Los Angeles County Board of Supervisors became the largest governmental entity in the nation to adopt a living wage law. The ordinance requires that a living wage of $8.32 an hour with health insurance, or $9.46 without, be provided to full-time employees of firms contracting with the County (and their subcontractors) for over $25,000 worth of services.

ACORN members recently negotiated an agreement requiring the Minnesota Wild Hockey Team, which had struck a deal with the city of St. Paul to build a stadium, to create at least 50 full-time living wage jobs at the new arena.

In Montgomery County, MD, where the Progressive Montgomery/New Party is pushing for an ordinance that would require country contractors and subsidy recipients to pay employees $10.41 an hour, County Executive Doug Dunkin has issued an executive order that would bring all county employees up to a minimum wage of $9 an hour plus health care. Duncan has also proposed making Montgomery County the first county in the country to offer a tax credit to low-income workers. While a tax credit would apply more broadly than wage requirements for county employees or those working for county contractors, County Council member Philip Andrews (D-Rockville), the living wage bill’s primary sponsor, maintains that tax credits are no substitute for higher wages for the working poor.

Information on dozens of living wage ordinances is available online at www.livingwagecampaign.org, or from Jen Kern c/o ACORN National Living Wage Resource Center, 739 8th Street, SE, Washington DC, 20003; 202-547-2500. Also contact the New Party, 800-200-1294; www.newparty.org.

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Shelterforce is the only independent, non-academic publication covering the worlds of community development, affordable housing, and neighborhood stabilization.

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