The National Association of Affordable Housing Lenders is known for its longstanding commitment to community development and affordable housing. Each of you here today has successfully pioneered ways to promote affordable housing and to provide fair and open access to credit. The FDIC applauds your success - and I personally commend you for the outstanding job that you do. This week is National Consumer Protection Week, so it should come as no surprise that I am here today to seek your assistance, again, in protecting the consumer, and, in particular, protecting the consumer from an increasing risk, the recent rise in predatory lending practices. First, I will talk about what predatory lending is, and how it can harm, not only individuals, but financial institutions and communities as well.
Predatory lending is intended to achieve abnormally high returns by taking advantage of consumers.
The term typically is used to describe a combination of unfair or abusive loan terms, unscrupulous and misleading marketing, and high pressure lending tactics that limit information or choices available to a consumer. Predatory practices are anathema to responsible lenders, but they are occurring every day, especially in poorer neighborhoods, particularly those that are the home of a disproportionate number of elderly or minority homeowners. Predatory lending takes many forms and reaches many markets. Abusive practices occur in the mortgage, home equity, credit card, auto lending, and payday lending markets. It is especially unfortunate, however, that home loans, which are keenly important to consumers, have offered unscrupulous lenders numerous opportunities to carry out abusive and predatory practices.