Jesse Jackson among critics of Responsible Lending Act
By MortgageDaily.com staff
3/30/2005

Civil rights activists have joined consumer advocacy groups in opposition of a national predatory lending bill.

The Responsible Lending Act, introduced in the House of Representatives by Reps. Bob Ney of Ohio and Paul Kanjorski of Pennsylvania this month, includes a federal anti-predatory lending law that preempts state and local predatory legislation.

In a press release Friday, several civil rights activists expressed their opposition to the bill, including Rev. Jesse Jackson, who serves as president of the Rainbow/PUSH Coalition; NAACP Chairman Julian Bond; Wade Henderson, director of the Leadership Conference on Civil Rights; Ira Rheingold, executive director of the National Association of Consumer Advocates.

The groups maintained the bill would weaken protections, such as those set by states, against predatory lenders, making it easier to rob the nation's "most vulnerable families" of their homes and savings. Some urged Congress to instead support a bill sponsored by Representatives Brad Miller and Mel Watt of North Carolina and Barney Frank of Massachusetts.

"Representatives Ney and Kanjorski fail to provide meaningful protections that will stop abusive mortgage lending targeted at African-Americans, Latinos, women, and elderly citizens," Jackson said in the prepared statement.

Civil rights groups' opposition echoes recent bashing of the bill by the Center for Responsible Lending, National Consumer Law Center, and other consumer advocacy groups.

The bill has received support from the Mortgage Bankers Association, the nonprime group Coalition for Fair and Affordable Lending, secondary market associations and other industry-related organizations.

"This legislation is just another immoral attempt by the banking industry, with help from their Congressional enablers, to avoid their own responsibility for the plague of predatory lending," Rheingold said.

The civil rights groups' announcement included the Center for Responsible Lending's analysis of the Ney-Kanjorski bill. Among the "biggest holes" the center says it found in the legislative piece: it bans mandatory arbitration on high-cost home loans only; it fails to count fees in deciding whether a borrower is protected by federal predatory lending law; it fails to stop abusive loan flipping as it the issue is only addressed for high-cost loans; and it rolls back provisions of federal law that protect borrowers from abusive lenders after their loan has been sold to an investor.

"Unscrupulous mortgage brokers, high cost lenders, and Wall Street investment banks will be able to rest secure in the knowledge that they can continue to arrange, make and finance predatory loans virtually unfettered," said Kevin Stein, an associate director of the California Reinvestment Committee. "The only losers are the unsuspecting families that struggle to keep up with oppressive payments on abusive loans, and the communities in which they live."

Groups representing investors have said that the legislation actually preserves the "benefits of subprime lending while helping to rid the market place of destructive predatory lenders" because state laws "unfairly" place the entire liability of lenders' actions on those who purchase loans and create mortgage-backed securities.

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