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September 17, 2002
Contact: Rachel Maleh (202) 628-8866

NCRC Applauds OCC for Strong Anti-Predatory Lending Action

Washington DC – The National Community Reinvestment Coalition (NCRC) applauds the OCC for its continued leadership on anti-predatory regulatory initiatives. Today, the OCC has banned the sale of single premium debt cancellation and suspension agreements in loans issued by nationally chartered banks.

Lending institutions promise to suspend or cancel mortgages in the event of unemployment or disability in return for borrower premiums for mortgage debt cancellation or suspension agreements. These products become abusive and are much more expensive when they are added to the loan amount instead of borrowers paying for them separately on a monthly basis. So called single premium, lump sum financing of these products is one of an extraneous fee that saddles borrowers with unaffordable loans and can lead to foreclosure, which is paradoxically, the event that these products are suppose to avoid.

John Taylor, President and CEO of NCRC states, "Given the absence of Congressional leadership, NCRC commends the OCC for its courage of stepping up and enacting new regulatory protections against predatory lending. This follows on the heels of vigorous OCC action against abusive payday lending. NCRC looks forward to working with the OCC on other anti-predatory initiatives in the near future."

NCRC is pleased that the OCC heeded the advice of NCRC and NCRC member organizations who warned in comment letters to the OCC that improved disclosures alone on these types of products will not protect consumers since the products are usually offered to the most vulnerable consumers in the subprime market.

NCRC urges the OCC to apply the same ban on single premium debt cancellation and suspension products to non-residential loans and to use their fair lending and safety and soundness exams to assess the extent of abuses for non-residential loans. The next frontier is applying more protections for non-residential loans since NCRC member organizations are encountering frequent abuses associated with consumer lending.

NCRC believes that the OCC’s counterpart agencies must swiftly follow the OCC’s lead on the ban of debt suspension and cancellation agreements. Another nettlesome issue is how to apply these consumer protection regulations to non-depository affiliates of banks and thrifts that fall out of direct jurisdiction the regulations. NCRC believes that the agencies must adopt a strong interagency stance on non-depository affiliates because the less-regulated parts of bank holding companies commit a large number of the abuses.

John Taylor concludes, "An integral part of filling the current administration’s commitment to expand minority ownership is to protect existing homeowners. The OCC took a significant step in this direction today. We urge more action quickly by Congress as well as the other regulatory agencies to develop a comprehensive set of protections."

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