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Groups Oppose OCC Preemption of State Anti-Predatory Lending Laws

Monday, October 6, 2003

DURHAM, NC -- Siding with groups of state officials such as the Conference of State Banking Supervisors, National Association of Attorneys General, and National Governors Association, a diverse group of leading civil rights and consumer organizations called on the Office of the Comptroller of the Currency (OCC) today to withdraw its controversial proposal to preempt application of state anti-predatory lending laws to national banks and their subsidiaries.

According to their comment letter, signed by organizations such as ACORN (Association of Community Organizations for Reform Now), Center for Responsible Lending, Consumer Federation of America, The Greenlining Institute, Leadership Conference on Civil Rights, NAACP (National Association for the Advancement of Colored People), National Consumer Law Center, National Council of La Raza, and National Fair Housing Alliance, there is growing evidence that state legislation has reduced abusive lending without reducing access to reasonable priced subprime home loans, for those with blemished credit. The group wrote that the OCC's proposal was, "... a blatant attempt to increase the power of the OCC at the expense of homeowners, the sovereignty of the states, and the intent of Congress."

Read CRL's Analysis of the OCC Working Paper, 'Economic Issues in Predatory Lending'.

Read CRL's Comments on OCC Proposed Rulemaking on Preemption of State Laws

Wade Henderson, Executive Director of the Leadership Conference on Civil Rights remarked, "These state laws provide invaluable protection to vulnerable homeowners against predatory lending, a real and immediate threat to minority family wealth. The OCC should withdraw its proposal."

The Center for Responsible Lending (CRL) estimates that predatory mortgage lending costs Americans $9.1 billion annually, stripping home equity from many minority, low-income, and elderly homeowners. Several states have enacted anti-predatory lending laws to strengthen protections available under the federal Home Ownership and Equity Protection Act (HOEPA). The OCC proposal would exempt national banks and their state-chartered subsidiaries from these important state laws protecting borrowers.

North Carolina passed its landmark law in 1999, resulting in savings of more than $100 million per year for Tarheel homeowners. Recent research by the Center for Community Capitalism at UNC found that under the North Carolina law, prepayment penalties dropped 72 percent, while rising 260 percent in South Carolina (which has since enacted an anti-predatory lending law). At the same time, loans to North Carolinians with impaired credit actually increased by 31 percent.

Joseph A. Smith, Jr., who as North Carolina Commissioner of Banks is the state's chief regulator of mortgage lenders, said, "We have not received a single complaint about a lack of subprime mortgage credit due to our anti-predatory lending law. National banks in North Carolina supported the law's passage and have not asked the OCC for preemption of our law. The OCC is attempting to solve a problem that doesn't exist."

The list includes: ACORN, Consumer Federation of America, The Greenlining Institute, Illinois Facilities Fund, Leadership Conference on Civil Rights, NAACP, National Association of Consumer Advocates, National Community Capital Association, National Consumer Law Center, National Council of La Raza, National Fair Housing Alliance, National Neighborhood Coalition, National Neighborhood Housing Network, Neighborhood Economic Development Advocacy Project, New Jersey Institute for Social Justice, New Yorkers for Responsible Lending, The Reinvestment Fund, and U.S. Public Interest Research Group.

Contact: Christine Kraly for CRL at 703-276-3258 or cKraly@hastingsgroup.com