ACB: Press Releases

Contact:	Robert Schmermund (202) 857-3104 Jim Eberle (202) 857-3145	Jim Eberle (202) 857-3145 (work) (703) 893-2593 (home) [email protected]	For Immediate Release March 13, 2001 #01-21
E-mail: [email protected]

ACB URGES CAUTION IN REVISING REGULATIONS TO ATTACK PREDATORY LENDING

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WASHINGTON, D.C. — America’s Community Bankers urged the Federal Reserve Board today to refrain from attacking predatory lending by revising regulations in a way that will deny legitimate loans to homebuyers.

ACB cautioned against discouraging lenders from serving certain borrowers and unreasonably stigmatizing certain loan terms. “Many responsible lenders may not offer some loan products, creating a vacuum that will open the door further to originators who are as prepared to flout the new rules as they have the existing prohibitions,” ACB said in a comment letter.

ACB endorsed lowering the trigger on high interest-rate loans, known as Home Ownership and Equity Protection Act loans, that require additional truth in lending disclosures. ACB affirmed its support for reducing the threshold to an annual percentage rate of 8 percentage points over the maturity of a comparable Treasury security from the current 10 percentage points.

ACB also said it supported requiring additional HOEPA disclosures of balloon payments and total amounts borrowed, and requiring documentation of a borrower’s ability to repay the loan.

But ACB objected to adding the cost of financed credit life insurance to the HOEPA points and fees trigger (4 percent of the loan amount) and prohibiting the refinancing of certain HOEPA and low-cost loans. ACB said the standard for doing so was too subjective.

ACB said that new restrictions on lending practices will have little practical effect on predatory loans by unscrupulous lenders unless laws and regulations are enforced. ACB called for stepped-up enforcement against unregulated lenders by state agencies and the Federal Trade Commission.

The comment letter is attached.

America’s Community Bankers is the national trade association committed to shaping the future of banking by being the innovative industry leader strengthening the competitive position of community banks. To learn more about ACB, visit www.AmericasCommunityBankers.com.

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