AARP Launches Drive Against Unscrupulous Mortgage Lenders

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AARP Launches Drive Against Unscrupulous Mortgage Lenders

AARP, alarmed at repeated reports of wide-scale predatory mortgage lending abuses, is mounting a national campaign to fight the problem.

Built around AARP's state legislative and litigation priorities, the campaign will link advocacy on behalf of older borrowers with a major consumer education initiative.

The campaign kicked off with state-based events in New York (April 17) and California (April 17 and 18), and in Ohio (April 24). Over the course of the year, AARP plans to launch its education and advocacy campaign in other states as legislators begin to consider predatory mortgage lending issues.

More than eighty percent of Americans 50 and older are homeowners. Predatory lending is a collection of unfair and deceptive practices used by some lenders to pressure homeowners into signing up for high cost and often unaffordable mortgage loans. The predatory lender manipulates individuals into obtaining a loan that they may not be able to pay off.

Frequently, older homeowners are ensnared in abusive loans because they are persuaded to borrow funds for home repairs, to cover health costs or to consolidate debts.

"There is an outrageous downside to the rosy scenarios offered by unscrupulous lenders," said AARP Associate Executive Director Dawn Sweeney. "There is ample evidence - starting with dozens of interviews that we have had in recent months with victims of abusive lenders - that people are sold loans as a miracle financial cure," Sweeney added. "Many homeowners are then stunned to find out that they cannot afford to pay off those loans and they may lose their homes."

With a theme: "They Didn't Tell Me I Could Lose My Home," AARP's campaign will:

	Offer an AARP toll-free number to consumers in the states targeted for the campaign. Consumers who call the hotline can order a borrowers' kit and obtain information about sources of assistance available nationally and in their states.
	Accelerate its drive to win approval by state legislatures of measures to curb predatory lending.
	Enhance its efforts to fight abusive lenders through its AARP Foundation Litigation attorneys.
	Provide a borrowers' kit with consumer tips and a checklist for those considering home equity loans, as well as fact sheets for dealing with home improvement contractors and reverse mortgages. The kit will advise consumers to consider all the costs and fees when taking a loan. The kit also will include an anti-predatory lending decal that can be displayed conspicuously at the consumer's home.
	Establish a web page (www.aarp.org/homeloans) that features consumer fact sheets and links to other sources of assistance and information.
	Support the campaign with transit and newspaper ads, as well as radio spots, in both Spanish and English.

AARP's efforts will be coordinated in individual states with law enforcement officials, state attorneys general, consumer advocates, and minority and community organizations.

Predatory lending has been described by federal agencies as involving one or more of these elements:

	providing unaffordable loans based on the borrower's assets, rather than on ability to pay;
	inducing a borrower to repeatedly refinance in order to charge high fees or points;
	or engaging in fraud or deception to hide some of the cost features of a loan.

AARP's state advocacy efforts are seeking to limit or prohibit these and the following additional predatory lending practices related to some home loans:

	Charging unfair prepayment penalties;
	Packing single premium credit and non-credit insurance products, and other excessive costs and fees in the amount of the loan;
	Requiring pre-dispute mandatory arbitration;
	Engaging in unfair, deceptive, and unconscionable practices in connection with the consumer credit transaction;
	Including balloon payments that lock borrowers into predatory loans.

AARP is the nation's leading organization for people 50 and older. It serves their needs and interests through information and education, advocacy and community services which are provided by a network of local chapters and experienced volunteers throughout the country. The organization also offers members a wide range of special benefits and services, including Modern Maturity and My Generation magazines and the monthly Bulletin.