Anti-Predatory Lending

North Carolina Leads Nation with Anti-Predatory Lending Legislation
DCRP research used as a base for national legislation

U.S. Reps. Brad Miller (NC-13) and Mel Watt (NC-12) have introduced anti-predatory lending
legislation that eliminates specific abusive lending practices and ensures that credit for home
ownership is available for consumers with impaired credit.

Introduced March 19th, the Prohibit Predatory Lending Act of 2004 is based on the State of North
Carolina's predatory lending statute, which is widely considered the model state statute for preventing
abusive lending while preserving access to credit.

”Predatory lending” encompasses a wide range of abusive practices engaged in by lenders who take
advantage of uninformed borrowers. Such practices include charging fees and rates that are not
reflective of the risk, not informing borrowers of less expensive loan alternatives and not disclosing
terms and options of products and services offered with a loan.

"This bill protects vulnerable consumers without cutting off credit for lower income borrowers,” Miller
said. "It's time that all American consumers have the protection that Carolina consumers now have.”

Since the North Carolina law was enacted, the state has seen a dramatic reduction in abusive or
predatory sub-prime lending and refinancing. A recent study (PDF) conducted at UNC at Chapel Hill
(Roberto Quercia, Michael Stegman, and Walter R. Davis) found that after the passage of North
Carolina legislation, there was a reduction of loans with predatory terms without a restriction in
access to or increase in the cost of loans to borrowers with imperfect credit.

Reps. Miller and Watt said that when the North Carolina law was drafted, lawmakers involved banks,
mortgage bankers and brokers, consumer organizations, non-profit organizations and credit unions
in reaching a consensus on the best ways to fight abusive lending practices.

Rep. Watt stated, “North Carolina’s approach in crafting its law ensured the creation of the best
possible law and, consequently, North Carolina is now the acknowledged leader in addressing predatory
lending. The federal government should follow North Carolina’s example and guarantee that borrowers
in every state have the same protections as the citizens of North Carolina."


RELATED LINKS: Roberto G. Quercia (email) (Web) Michael A. Stegman (email) Walter R. Davis (email) Anti-Predatory Lending Study Center for Community Capitalism Housing and Community Development CURS		North Carolina Leads Nation with Anti-Predatory Lending Legislation DCRP research used as a base for national legislation U.S. Reps. Brad Miller (NC-13) and Mel Watt (NC-12) have introduced anti-predatory lending legislation that eliminates specific abusive lending practices and ensures that credit for home ownership is available for consumers with impaired credit. Introduced March 19th, the Prohibit Predatory Lending Act of 2004 is based on the State of North Carolina's predatory lending statute, which is widely considered the model state statute for preventing abusive lending while preserving access to credit. ”Predatory lending” encompasses a wide range of abusive practices engaged in by lenders who take advantage of uninformed borrowers. Such practices include charging fees and rates that are not reflective of the risk, not informing borrowers of less expensive loan alternatives and not disclosing terms and options of products and services offered with a loan. "This bill protects vulnerable consumers without cutting off credit for lower income borrowers,” Miller said. "It's time that all American consumers have the protection that Carolina consumers now have.” Since the North Carolina law was enacted, the state has seen a dramatic reduction in abusive or predatory sub-prime lending and refinancing. A recent study (PDF) conducted at UNC at Chapel Hill (Roberto Quercia, Michael Stegman, and Walter R. Davis) found that after the passage of North Carolina legislation, there was a reduction of loans with predatory terms without a restriction in access to or increase in the cost of loans to borrowers with imperfect credit. Reps. Miller and Watt said that when the North Carolina law was drafted, lawmakers involved banks, mortgage bankers and brokers, consumer organizations, non-profit organizations and credit unions in reaching a consensus on the best ways to fight abusive lending practices. Rep. Watt stated, “North Carolina’s approach in crafting its law ensured the creation of the best possible law and, consequently, North Carolina is now the acknowledged leader in addressing predatory lending. The federal government should follow North Carolina’s example and guarantee that borrowers in every state have the same protections as the citizens of North Carolina."
	Center for Community Capitalism The Kenan Institute’s Center for Community Capitalism engages in multi-disciplinary research and outreach activities that explore ways to apply private sector approaches to revitalization of America's distressed communities. The Center's work focuses on techniques that are both effective in building wealth and assets in disadvantaged communities and are sustainable from a business perspective. The Center works in three major areas: Exploring ways to leverage electronic banking technology to create new markets for financial services and savings accumulation opportunities for residents of underserved communities Supporting community wealth-building through home ownership Documenting the business potential of America's urban and rural emerging markets The Center works to foster public policies that encourage innovation in community development, working with business and government to devise solutions to the challenges confronting under-invested communities. For more Community Capitalism information