New York's
Senator CHARLES E. SCHUMER
FOR IMMEDIATE RELEASE May 30,
2001
SCHUMER, JACKSON ANNOUNCE NEW PARTNERSHIP TO
FIGHT PREDATORY LENDING WITH NY BANKERS ASSOCIATION, FANNIE MAE
New initiative, prompted by
Schumer report, seeks to increase home ownership in minority
communities and stop predatory lending before it starts
US Senator Charles E. Schumer,
Reverend Jesse Jackson, the New York Bankers Association (NYBA) and
Fannie Mae today unveiled the House Equity Lending Project (HELP): a
pilot program aimed at reducing predatory lending in New York City.
The initiative - a collaborative effort of New York conventional
lending institutions, faith-based organizations and Fannie Mae
prompted by a 2000 Schumer report on predatory lending practices -
seeks to increase access to conventional loans in New York City
minority communities by providing residents with counseling
assistance, direct access to major conventional lenders and consumer
education programs.
"When it comes to access to conventional
lending institutions and the presence of subprime lenders, blacks
and whites in New York City may as well be living on different
planets, " said Schumer. "By bringing together the leading mortgage
lenders, Fannie Mae and our faith-based organizations, this
initiative will help bridge the lending divide and put
predatory lenders out of business."
"In the Bible, we
observe, birds have nests, foxes have holes but the son of man has
no place to lay his head. Therefore, one of the most important steps
in obtaining dignity and self determination is home ownership," said
Jackson.
"Fannie Mae has long been concerned about predatory lending and
we strongly support a Mortgage Consumer Rights agenda," said Jamie
S. Gorelick, Vice Chair, Fannie Mae. "We believe the mortgage
finance industry must protect consumers against abuse, and establish
standards for responsible lending. Working with lenders,
non-profits, faith-based organizations, and other parties, Fannie
Mae is committed to provide families with greater opportunities for
long term homeownership."
"We are pleased to announce the establishment
of a new 'home loan hotline,' financed by New York Bankers
Association and Fannie Mae to help bridge the gap. We commend
Senator Schumer, Fannie Mae, the participating church leaders and
our member banks for their leadership and commitment to this
partnership," said Michael P. Smith, President of the New York
Bankers Association.
The increasing need for mortgage loans in predominantly black
communities, coupled with a lack of conventional lenders in many
neighborhoods, has created a void within New York City's loan market
that has been infiltrated by predatory lenders.
The extent of the void was chronicled in an April 2000 Schumer
report entitled, "Capital Access: Lending Patterns in Black and
White Neighborhoods," which found that black neighborhoods were six
times as likely as white neighborhoods to rely on subprime lending
institutions which charge much higher rates and origination fees
than conventional banks and often use predatory practices to attract
new borrowers. The report also found that individuals residing in
predominantly white neighborhoods were far more likely to obtain
conventional financing for home purchasing than those who reside in
black neighborhoods of comparable income levels
The HELP program seeks to address this
disparity by improving access to lower
cost loans from conventional lending sources in communities that
have high incidence of subprime lending. The program would help
stimulate economic growth, curb predatory lending and build trust
and credibility of conventional lending institutions within minority
communities. The initiative will initially be launched in the
Southeast Queens and Central Brooklyn neighborhoods, in conjunction
with Allen AME and Bridge Street AME Church, and will feature the
following:
- An (800) number operated by the New York Bankers Association
to give residents access to mortgage loans for home purchase or
refinance. The hotline will put residents in touch with the nine
banks that are participating in the pilot. The banks will then
offer consumers lowest-cost products for which they qualify, as
well as referrals to an active network of credit and housing
counseling agencies. Fannie Mae will purchase many of the loans
and support the nine banks in any way they can. The participating
lenders include J.P. Morgan Chase, Citigroup, Fleet, DIME/NAMCO,
Bank of New York, EAB, Northfork and Greenpoint .
- Outreach campaigns in the target
communities run by the faith-based institutions participating in
the project. Specifically, one church in each community will take
a leadership role - Allen AME in Queens and Bridge Street Church
in Brooklyn - in alerting community members about the
hotline.
- Consumer seminars hosted by the
participating banks to educate residents on the lending
process.
- A resource clearinghouse to link potential
applicants with information on available lending products to
consumers
- A financial literacy handbook specifically
for faith-based institutions developed by the Faith Center for
Community Development and funded by a $50,000 Fannie Mae
grant . The
Faith Center will also conduct training courses in at the two
leadership churches and make consumer materials available through
these institutions.
Rev. Jackson, Rev. Floyd Flake,
Gorelick, Rev. David Cousins of Bridge Street AME , and Michael P. Smith, President of the New York
Bankers Association, joined Schumer at a news conference to
announce the initiative.
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