I 
108TH CONGRESS 
1ST SESSION H. R. 1865
To authorize the Secretary of Housing and Urban Development to make 
grants to States, units of general local government, and nonprofit organi-
zations for counseling and education programs for the prevention of 
predatory lending and to establish a toll-free telephone number for com-
plaints regarding predatory lending, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
APRIL 29, 2003
Mr. SCOTT of Georgia introduced the following bill; which was referred to the 
Committee on Financial Services 
A BILL 
To authorize the Secretary of Housing and Urban Develop-
ment to make grants to States, units of general local 
government, and nonprofit organizations for counseling 
and education programs for the prevention of predatory 
lending and to establish a toll-free telephone number 
for complaints regarding predatory lending, and for other 
purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Prevention of Preda-
tory Lending Through Education Act’’.
SEC. 2. FINDINGS. 
The Congress finds the following: 
(1) While expanded access to credit from both 
prime and subprime lenders has contributed to the 
highest homeownership rates in the Nation’s history, 
there is growing evidence that some lenders are en-
gaging in predatory lending practices—excessive 
front-end fees, single-premium credit life insurance, 
and exorbitant prepayment penalties—that make 
homeownership much more costly for families that 
can least afford it. 
(2) Borrowers with fair to good credit ratings 
may be able to obtain loans in the ‘‘prime’’ mortgage 
market, with the lowest interest rates and costs. 
(3) Borrowers with blemished credit histories 
obtain mortgage loans in the ‘‘subprime’’ mortgage 
market, with higher interest rates and loan fees than 
are obtainable in the prime market. Some subprime 
lenders have been making loans on terms that are 
regarded as ‘‘predatory’’. 
(4) Predatory lending involves home mortgages, 
mortgage refinancing, home equity loans, and home 
repair loans with unjustifiably high interest rates, 
excessive fees, balloon payments, prepayment pen-
alties, and the imposition of other unreasonable, and 
sometimes fraudulent, terms.
(5) Predatory loans are said to have grown rap-
idly in minority neighborhoods, often stripping away 
wealth that may have taken owners decades or a 
lifetime to accumulate. 
(6) Some communities that have lacked access 
to traditional institutions were being victimized by 
second mortgage lenders, home improvement con-
tractors, and finance companies who peddled high 
interest rate home equity loans with high loan fees 
to cash-poor homeowners. Borrowers, who may not 
have fully understood the terms of the loans, and 
who may not have been offered adequate disclosures 
of the loan terms, often have struggled to meet over-
whelming mortgage payments and too often ulti-
mately lost their homes through foreclosure. 
(7) A joint report by the Department of Hous-
ing and Urban Development and the Treasury De-
partment, issued June 21, 2000, entitled ‘‘Curbing 
Predatory Home Mortgage Lending’’, urged the 
Congress to adopt legislation that would restrict 
abusive terms and conditions on high-cost loans, 
prohibit harmful sales practices in mortgage mar-
kets, improve consumer literacy and disclosures, pro-
hibit government-sponsored enterprises from pur-
chasing loans with predatory features, and establish 
predatory lending as a factor in CRA evaluations. 
(8) The joint report proposed a four-point plan 
to address predatory lending practices, as follows: 
(A) To improve consumer literacy and dis-
closures, the report recommended requiring 
lenders to recommend that applicants for high-
cost loans avail themselves of home mortgage 
counseling, to disclose credit scores to all bor-
rowers upon request, and to give borrowers 
more timely and more accurate information on 
loan costs and terms. 
(B) To prohibit harmful sales practices in 
the mortgage market, the report recommended 
the banning of practices such as loan ‘‘flipping’’ 
and lending to borrowers without regard to 
their ability to repay the loan, imposing new re-
quirements on mortgage brokers to document 
the appropriateness of a high-cost loan for cer-
tain applicants, and requiring lenders who re-
port to credit bureaus to provide ‘‘full-file’’ pay-
ment history for their mortgage customers. 
(C) To restrict abusive terms and condi-
tions on high-cost loans, the report rec-
ommended that the Congress increase the num-
ber of borrowers in the subprime market cov-
ered by legislative protections, further restrict 
balloon payments on high-cost loans, restrict 
prepayment penalties and the financing of 
points and fees, prohibit mandatory arbitration 
agreements on high-cost loans, and ban lump-
sum credit life insurance and similar products. 
(D) To improve market structure, the re-
port recommended the award of credit under 
the Community Reinvestment Act of 1977 
(CRA) to lenders that promote borrowers from 
the subprime to prime mortgage market, the 
denial of CRA credit to lenders for the origina-
tion or purchase of loans that violate applicable 
lending laws, the disclosure by lenders of the in-
cidence of high-cost loans in pools of mortgage-
backed securities, and the disclosure of the inci-
dence of such loans in the offering documents 
for such securities. 
(9) A recent study by the Center for Commu-
nity Change, entitled ‘‘Risk or Race? Racial Dispari-
ties and the Subprime Refinance Market’’ found a 
geographic concentration of subprime lending in mi-
nority neighborhoods and to borrowers of color at all 
income levels.