ACORN’s war on predatory lenders, those financial institutions that charge high interest rates on loans and market heavily to poor and minority neighborhoods, is getting personal. Thursday, several busloads of ACORN activists motored out to two Long Island towns to picket the houses of Mark Rosenblum and David Movtady, bigwigs at FHB Funding and Golden National Mortgage, respectively.
At a City Hall press conference earlier this month, ACORN and several black and Latino lawmakers called on Attorney General Eliot Spitzer to launch a full investigation of the predatory lending industry and demanded the State Banking Department come up with better regulations for non-bank lenders. The AG has sued Delta Funding for unfairly targeting minorities, settling this summer for $6 million. While Attorney General spokesperson Christine Pritchard said that the AG is considering asking for changes in the state banking law, she could not provide details.
Predatory lenders target people with poor credit ratings who can’t get loans at regular banks. But in many inner city neighborhoods, people with good credit also use predatory or “sub-prime” lending firms. These firms charge interest rates that are 2 to 3 percentage points higher than the rates banks usually charge, which can cost a person who borrows $100,000 as much as to $65,000 in interest over a 30-year period.
Congresswoman Nydia Velasquez said traditional banks that don’t reach out to inner city neighborhoods are partly to blame for the growth of predatory lending. “Some members of the financial community are taking advantage of this redlining,” she said.
As for the Banking Department, it proposed a new set of regulations this summer for high-cost home loans that included rules prohibiting lenders from asking for balloon payments, loans that conclude with massive final lump sum payouts. Also, the new regulations-still awaiting approval-would make it illegal for lenders to give a loan “without due regard to repayment ability” or without giving customers a list of lending counselors to consult.