(cont'd)
Help For Consumers
Government regulators,
consumer advocates and legislators agree that laws protecting consumers
from predatory lending have been slow to develop because the industry
grew from a ripple to a tidal wave in just the last year and a half.
While consumers
borrowing money are protected by laws, including the federal Truth-in-Lending
Act, predatory lenders have been able to walk a fine line between
what's legal and what's not, consumer advocates say.
But that is changing.
In June, the U.S. Department of Treasury and HUD urged Congress and
individual states to adopt laws banning excessive fees, credit insurance,
balloon payments and other predatory tactics.
North Carolina
became the first state to enact such anti-predatory lending regulations,
last fall. The new rules already have caused a half-dozen lenders
to move out of North Carolina.
Other states'
legislatures and banking commissions are following North Carolina's
lead.
Bromley of Metropolitan
Strategy Group said local consumer advocates are pushing for similar
legislation in Ohio. The effort has started slowly as his office and
other non-profit groups are trying to get churches, businesses and
legitimate banks to raise awareness about predatory lending. They're
also being encouraged to pressure state legislators.
In a separate
effort, Cleveland Mayor Michael R. White and city officials are working
with mortgage powerhouse Freddie Mac on a public awareness campaign
to teach local residents about home loans and warn them about making
deals they don't understand.
But education
is only part of the answer, Bromley says. "We need to work very hard
on the statewide issue. The General Assembly can do this. We just
need to get their attention."
In the meantime,
Metropolitan Strategy Group expects to file more lawsuits against
other local predatory lenders accused of ripping off local homeowners,
according to agency attorney Carole Heyward.
But Heyward, who
has tallied more than a hundred phone calls from victims, says the
lawsuits and any future legislation won't be enough for the people
who have already suffered. She has lost track of how many victims
ended up getting second jobs to keep up with their loans, borrowing
from their 401(k), or getting divorced. "Something will eventually
be done about this," Heyward says. "But how many more people by then
will have lost their homes?"
