WHAT IS PREDATORY LENDING?

Predatory lending is the practice of offering individuals home refinance mortgage loans with conditions the individual cannot afford.

Predatory lending is essentially loan-sharking.

Predatory loans typically involve very high interest rates (>11%), prepayment penalties, deceptive practices often hidden in the "fine print," and a failure on the part of the lender to consider the borrower's ability to afford the monthly payments.

Predatory lenders tend to target the elderly and minority populations. The elderly are targeted because this population is housing rich but cash poor. Minority populations fall prey to predatory lenders as a result of institutional racism; even today, traditional lenders may redline minority neighborhoods making predatory lending institutions the only source of capital in the neighborhood.

CIOP FOUGHT PREDATORY LENDING ON A VARIETY OF FRONTS

1. We challenged finance companies that were engaging in predatory lending practices to stop these practices and to repair the predatory loans they had made.


2. CIOP organized three direct actions on Citifinancial/Associates finance offices in Decatur, Springfield and Bloomington to use confrontation to bring about negotiation.


3. CIOP then held the first national hearing with the FTC on the practice of predatory lending. As a result of the meeting, the FTC filed a $50,000,000 lawsuit against Citifinancial with reparations going to families who were victims of the corporation's predatory lending practices.


4. CIOP simultaneously fought to change Illinois State Law to make predatory lending practices illegal.

VICTORY CAME IN THREE PARTS:

1. Citifinancial entered into a landmark agreement with National People's Action (NPA) and CIOP changing their sub prime lending policies nationally. Citifinancial also agreed to repair those loans that were identified as predatory.


2. Governor Rod Blagojevich signed into law the nation's toughest anti-predatory lending bill. CIOP had worked with key legislators to develop the bill, which passed unanimously in the Illinois State Legislature. CIOP leader, Jack Porter, was invited to attend the signing ceremony where he received a ceremonial pen from the governor in recognition of the organization's efforts


3. CIOP worked with local borrowers affected by predatory lending to finance healthy loans, saving families who were on the brink of foreclosure