Media Center

Congressman David Scott continued his campaign to stop predatory lending by urging passage of The Responsible Lending Act today at a joint hearing of the Subcommittee on Housing and Community Opportunity and the Subcommittee on Financial Institutions and Consumer Credit. Congressman David Scott is a co-sponsor of The Responsible Lending Act (H.R. 1295), introduced by Congressmen Bob Ney (R-OH) and Paul Kanjorski (D-PA). The bill includes Congressman Scott’s provision for a nationwide toll-free number to receive complaints and provide information about predatory lending and credit counseling.

“Because predatory lending is a targeted abuse against specific groups, usually the elderly, minorities, and low- income borrowers, this legislation targets assistance and funding to the most vulnerable groups. I am especially pleased that The Responsible Lending Act includes my provision for a fully-staffed, toll-free number that consumers can call and get the help they need,” said Congressman Scott.

Borrowers with fair to good credit ratings generally obtain home loans in the “prime” mortgage market, with the lowest interest rates and costs. Americans with lower credit scores, inadequate proof of income or little cash reserves for down payments more often rely on the secondary “subprime” market, where borrowers pay higher rates and servicing costs to offset greater risk to lenders. A recent study by the Center for Community Change, entitled “Risk or Race? Racial Disparities and the Subprime Refinance Market” found a geographic concentration of subprime lending in minority neighborhood and to borrowers of color at all income levels.

Abusive sales practices, commonly referred to as “predatory lending,” involve home mortgages, mortgage refinancing, home equity loans, and home repair loans with unjustifiably high interest rates, excessive fees, prepayment penalties, and balloon payments.

In January, Congressman Scott introduced H.R. 200, The Prevention of Predatory Lending Through Education Act, to authorize the Secretary of Housing and Urban Development (HUD) to provide funding to states for counseling and education programs designed to help stop predatory lending. H.R 200, which is currently pending in the Subcommittee on Housing and Community Opportunity, also establishes a toll-free number for complaints regarding predatory lending.

Congressman David Scott is a member of the House Financial Services Committee.

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