Copyright 2001 Star Tribune  
Star Tribune (Minneapolis, MN)
July 27, 2001, Friday, Metro Edition
SECTION: NEWS; Pg. 16A

LENGTH: 389 words

HEADLINE: Lending practices criticized;
St. Paul man tells Senate panel loan was path to even more debt

BYLINE: Jessica Thompson; Staff Writer

DATELINE: Washington, D.C.

BODY:
RSEC:             St. Paul resident Paul Satriano testified before a Senate committee Thursday, saying that he fell prey to predatory lending practices _ loans that are given with unfair terms and hidden costs.

     Satriano said he took out a loan last November from Beneficial, a consumer lender owned by the Illinois-based Household International, to pay off his credit card bills. He said the company persuaded him and his wife to consolidate their two mortgages, and he wound up sinking even further into debt.

     "We're left with a loan amount much higher than the value of our home, higher payments, more debt staked against our house, and a higher interest rate than before," Satriano told the Senate Banking, Housing and Urban Affairs Committee.

     "When things are tight, as they are, it's pretty frightening to owe more money every month, without having gained anything from it," said Satriano, who is a member of the St. Paul-based consumer rights group ACORN _ Association of Community Organizations for Reform Now.

     Megan Hayden, a Household spokeswoman, said that terms of loans are disclosed to all customers, as required by state and federal laws.

      "Frankly, you don't stay in business in this industry by taking advantage of your customers," she said. "So I take exception to any characterization that we engage in predatory lending practices."

     On Thursday, the Coalition for Responsible Lending, based in Durham, N.C., released a report showing that predatory lending tactics cost borrowers an estimated $9.1 billion annually _ mostly in exorbitant loan rates, hidden fees and foreclosures.

     Satriano said his contract includes a provision that bars him from taking legal action against the company. Senators at the hearing said most of the tactics used by lenders are technically legal, which makes it unlikely that victims will reclaim their lost money.

     Sen. Paul Wellstone, D-Minn., said he is developing legislation with Sen. Paul Sarbanes, D-Md., that would tighten existing laws against unscrupulous lenders. Wellstone said the lenders       "even claim to be performing a public service: providing loans to the uncreditworthy. It just also happens to be obscenely profitable to overwhelm vulnerable borrowers with debt at usurious rates of interest."



LOAD-DATE: July 27, 2001