October 19, 2006
Walk through many communities in the Chicago
area, and you will quickly see the devastating effect that predatory lending
and foreclosures are having. Let's be blunt about it: Predatory lending is a
wicked force that blights our neighborhoods and needs to be stopped.
Targeting predatory lending, and serving consumers who
are affected by it, is the reason why a new state law, H.B. 4050, is such a
good idea. The pilot law creates a tracking system (called the Predatory
Lending Database) for loans in 10 communities hardest hit by these practices,
enabling the state to determine which loans are predatory loans. In some cases,
the law also requires borrowers to participate in counseling offered by a
HUD-certified housing counselor prior to loan closing.
Mary Mitchell's column ''State mortgage law backfires on
most vulnerable homeowners'' (Oct. 5) tells a story about people and
communities who have been victimized by predatory lending — and stand to
benefit from this new program. Mitchell's story is alarming. Unfortunately, she
— and a few others — tell a deeply misleading story about this law.
Mitchell, writing about the impact of the law, quotes one
homeowner as saying that ''no mortgage company will ever deal with us.'' She
quotes an agent with MarTav, a company that is being investigated by the
Illinois attorney general's office for mortgage fraud, as saying, ''People are
trying to purchase their homes back and loan officers can't get their deals
done. It's really discrimination.'' One homeowner says many lenders ''are no
longer doing business in this area.''
The idea, of course, is that this law is making it tough
for people in these neighborhoods to get mortgages. That idea is not true. Even
worse, it only serves to scare consumers and exacerbate fears. We know that
there are many, many different kinds of lenders in our communities — more than
enough for qualified consumers to find a home loan that suits their needs.
Inquiries made to several notable Chicago
lending houses, in fact, reveal that they continue to do business in these
This new law is also benefitting people by providing them
with reliable information about lenders and the home loan process. That is why
an 85-year-old man who sought to refinance his home learned through counseling
created by this program that he had been misled by a lender. He had been led to
believe he was applying for a long-term, fixed-rate loan, but in reality it was
an adjustable rate mortgage.
This man is not alone. H.B. 4050 will make a positive
difference for many consumers and communities. It will, however, be a big
problem for one group: predatory lenders and other fraudulent actors.
Malcolm Bush, president,
Raul Raymundo, CEO, Resurrection Project
Jim Capraro, executive director, Greater Southwest
Livia Villarreal, director of counseling services, Southwest
Betty Gutierrez, strategy team, Southwest