I have talked a lot lately about black land loss and the various unscrupulous ways African Americans lose their property.  There is a modern day, pervasive chapter in this saga that often sneaks under the radar screen.

            Have you ever received an unsolicited call from a mortgage lender offering you an opportunity to consolidate your debts and lower your monthly payments?  Surely, you have received junk mail offering you a similar opportunity. 

The economic downturn and rising unemployment have made conditions ripe for lenders who prey on folks desperate to find a way out of their mounting debts -- home mortgages, car payments, credit card debt, student loans, medical bills and the list goes on and on.  It sounds enticing when homeowners are offered a consolidation loan, especially for those who have bad credit and cannot obtain a loan from a traditional lending institution.  These non-traditional, second mortgages carry interest rates and fees that are astronomical.  These loans seemed designed to set the borrower up for failure, and in the end the homeowner loses his or her property.  And these loans are marketed in large part to minority communities. 

          During my first term in Congress, we passed the Home Ownership and Equity Protection Act of 1994 to help regulate lenders who prey on those with an inability to meet the obligations of these loans.  The 1994 amendment to the Truth in Lending Act does not limit the interest rate and loan fees that lenders may charge.  Instead it imposes a three-day “cooling off” period for borrowers to review the terms; prevents balloon mortgages for loans with terms less than five years; bars penalties for paying the loan off early; prohibits lenders from giving loans to borrowers who cannot demonstrate the ability to meet the scheduled payments; and gives borrowers the right to rescind the loan if the lender violated any of these new regulations or did not provide the correct disclosures. 

            This legislation is woefully inadequate to protect the consumer.  It was written in a way that would make it acceptable to the financial interests involved in these lending practices.  I understand that there is a great need for credible lenders to provide loans for people who have poor credit, and there is an added risk involved in making funds available to this market.  However, some lenders are taking advantage of loose regulation of these loans, which in many cases results in foreclosure when borrowers are unable to meet their obligations.  

            I have witnessed traditional lenders like Fannie Mae, mortgage companies and local banks work together to provide lower interest, conventional mortgages to African Americans with weak credit histories.  They have come together through the Congressional Black Caucus’ WOW (With Ownership, Wealth) initiative to help us meet the goal of adding one million new blacks to the homeownership roles by 2005.  Despite the strides the CBC is making to grow African American homeownership, our efforts are being undermined by government-condoned predatory lending practices. 

            This issue is gaining attention of lawmakers on the state level, but I believe it is time to revisit it federally as well.  There are several pieces of legislation that have been introduced to address predatory lending, but no action has been taken.  I support the Predatory Lending Consumer Protection Act of 2002 that would add amend the Truth in Lending Act to cap loan fees; disclose to borrowers the high interest rates and the availability of lower interest rate loans; and provide borrowers with credit counselor contact information.

            As a nation, we are just coming to grips with illegal predatory practices in the insurance industry that have overcharged African Americans on their premiums for decades.  We must now begin to address predatory lending practices that overwhelmingly affect blacks by instituting laws that will make what are already unethical practices illegal.  If not, the government will continue to be a partner in yet another tragic black land takings saga. 

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