Colorado latest setting for predatory lending fight

<p>By JIM RUBENSTEIN CU Times Southwest Correspondent DENVER – The Colorado legislature is shaping up as the next staging ground for the fight over predatory lending with a coalition of consumer groups and the Colorado Credit Union System pitted against so-called unscrupulous mortgage lenders. Hearings on a predatory lending bill, banning prepayment penalties and limiting fees for high cost mortgages and introduced in the State Senate Jan. 11, are expected to be held after Feb. 1 in the Senate Commerce Committee. “We do anticipate strong opposition from finance companies, but we are hopeful of winning passage of the bill aimed at those lenders which have engaged in gouging people with excessive rates,” declared Jane Willard, vice president of government affairs for the Colorado CU System (League). Joining the League in supporting the bill in a “Fair Lending Coalition” are the American Association of Retired Persons, the Colorado Public Interest Research Group, Consumers United Association, and the Association of Community Organizations for Reform Now (ACORN). The Colorado bill is modeled after similar bills progressing through a number of state legislatures this session and in 2001. The Colorado League also identified its bill as being based on “AARP model legislation.” One model bill, said the Colorado League, was adopted in North Carolina. A spokesman for the North Carolina Credit Union Network said its original restrictive law was enacted in 1999, and last year the state adopted new licensing rules on mortgage lenders to curb unsavory practices. In Colorado, consumer groups over the last two weeks have been conducting a media blitz to focus public attention on the problem, with press conferences held by the group. One such conference was held in a victim’s home. Among provisions of the bill, introduced by Sen. Doug Linkhart (D-Denver), it would ban prepayment penalties on subprime loans and limit the maximum rate to 8 points over U.S. treasury bill yields for mortgages. It would ban refinancing of high interest loans unless there is “a reasonable and tangible benefit to the borrower.” It would also ban most balloon payments and increased interest rates upon default. There would be no mandatory arbitration clauses, no abusive late fees, or no modifications on deferral fees. The Colorado Mortgage Lenders Association said it does not oppose the measure in principle but expects to seek modifications. It said banning prepayment penalties is acceptable provided it is applied only to high cost loans. The association said it would oppose any bill that would prevent a homeowner from refinancing from a lower rate to the current rate just because it happens to be higher. – [email protected]</p>