[Federal Register Volume 65, Number 72 (Thursday, April 13, 2000)]
[Notices]
[Pages 19917-19918]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-9284]



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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-4590-N-01]


Notice of Public Forums and Establishment of HUD Task Force on 
Predatory Lending Practices

AGENCY: Office of the General Counsel, HUD.

ACTION: Notice.

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SUMMARY: HUD announces that its Assistant Secretary for Housing-FHA 
Commissioner and its General Counsel will co-chair public fact-finding 
forums on the subject of predatory lending practices during the months 
of April and May 2000, in the cities of Chicago, Los Angeles, New York 
and Baltimore. HUD is conducting these forums to gather as much 
information as possible to propose substantive protections to address 
abusive lending practices. Toward this objective, HUD also announces 
the establishment of a Task Force on predatory lending practices. HUD's 
Task Force includes representatives of consumer, civil rights, 
community and industry organizations as well as local officials. HUD 
will solicit the individual views of these members to draw upon their 
experience, efforts and successes at addressing abusive lending 
practices at the state and local level throughout the Nation.

DATES: The specific dates and times of HUD's forums as well the issues 
to be addressed will be announced on HUD's web site at http://www.hud.gov and through HUD's Office of Public Affairs.

FOR FURTHER INFORMATION CONTACT: If you have questions concerning this 
Notice you may contact Allen Fishbein at (202) 708-3600, or via 
facsimile at (202) 708-2842, or in writing at the Department of Housing 
and Urban Development, 451 Seventh Street, SW., Room 9110, Washington, 
DC 20410.
    For legal questions, you may contact Kenneth A. Markison, Assistant 
General Counsel for GSE/RESPA, or Teresa L. Baker, Attorney for RESPA, 
Room 9262, Department of Housing and Urban Development, Washington, DC 
20410; telephone (202) 708-3137 (these are not toll free numbers). 
Hearing or speech impaired individuals may access these numbers via TTY 
by calling the toll free General Information Relay Service at 1-800-
877-8339.

SUPPLEMENTARY INFORMATION:

I. HUD's Views on Predatory Lending Practices

    Predatory lending abuses inflate real estate settlement costs, 
involve high interest rates, result in debts that families cannot 
afford to repay, strip equity and, in the worst cases, result in 
default and the loss of homeownership. Evidence from around the country 
continues to indicate that many of those engaged in predatory lending 
practices target low income minority communities for their activities, 
and may be treating minority and elderly borrowers less favorably than 
others based on their race, age, color or national origin.
    Simultaneous with this review, HUD, through its proposed rule on 
new housing goal levels for the Federal National Mortgage Association 
(Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie 
Mac) (collectively, the Government Sponsored Enterprises, or GSEs), 
issued March 9, 2000 (65 FR 12632), will determine what controls should 
be established to avoid counting high cost loans with predatory 
features towards the GSE Housing goals. Additionally, while HUD has 
addressed related problems in HUD's Federal Housing Administration 
(FHA) program, including appraisal issues, HUD must make certain that 
FHA program beneficiaries are protected from predatory abuses.

II. Background

    In July, 1998, HUD and the Board of Governors of the Federal 
Reserve System (Board) delivered a Joint Report to Congress 
Recommending Reform of the Real Estate Settlement Procedures Act 
(RESPA) and the Truth in Lending Act (TILA). HUD and the Board 
recommended a number of legislative proposals to remedy predatory 
lending abuses.
    HUD has legal authority under several laws that can, at least in 
part, address a number of these abuses.
    RESPA requires that consumers be provided with greater and more 
timely information on the nature and costs of the settlement process 
including the costs of obtaining a mortgage loan. RESPA also protects 
consumers from unnecessarily high settlement charges caused by 
kickbacks, referral fees and unearned fees involved in real estate 
settlement services. (12 U.S.C. 2601, et seq.)
    The Fair Housing Act prohibits discrimination on the basis of race, 
color, religion, sex, familial status, national origin, or handicap in 
residential real-estate related transactions, which are defined to 
include the making or purchasing of mortgage loans. (42 U.S.C. 3605.)
    The Federal Housing Enterprises Financial Safety and Soundness Act 
requires the Secretary to establish goals for the GSEs' purchase of 
mortgages for low- and moderate income families, properties in central 
cities, rural and other underserved areas and special affordable 
housing. The Act also requires the Secretary to prohibit discrimination 
in the GSEs' mortgage purchases. (12 U.S.C. 4501 et seq.)
    The National Housing Act established the Federal Housing 
Administration program, a key component of the Department, to provide 
mortgage insurance to facilitate homeownership. (12 U.S.C. 1701 et 
seq.)

III. HUD's Actions To Address Predatory Lending Practices

The Task Force

    The Secretary of HUD has appointed a Task Force on Predatory 
Lending, which will be chaired by the Assistant Secretary for Housing, 
who is also the FHA Commissioner, and HUD's General Counsel. HUD's Task 
Force includes representatives of consumer, civil rights, community and 
industry organizations as well as local officials. The members of the 
Task Force will:
    (1) Provide individual views on predatory lending practices and 
help develop a list of experts and other knowledgeable persons who may 
participate and share their knowledge of, and experience in, the 
subject of predatory lending practices at the planned public forums;
    (2) Help HUD consider and understand the views presented at the 
forums by giving individual members' reactions to the testimony 
presented; and
    (3) Provide individual perspectives on proposals that might be made 
as a result of the forums.
    By including a wide-range of experts and advocates on the Task 
Force, HUD will draw upon the good work that has already been done on 
this problem at the state and local level in various parts of the 
Nation.

The Public Forums

    HUD's Assistant Secretary for Housing/FHA Commissioner and the 
General Counsel will also co-chair at least four public forums during 
April and May, 2000, to gather information and views on this problem. 
HUD has planned public forums for the cities of Chicago, Los Angeles, 
New York and Baltimore. At one or more of these forums, HUD will 
address a range of issues including:
     The dimensions of the problem;
     Distinguishing predatory lending practices from beneficial 
subprime lending;

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     The adverse effects of predatory lending practices on 
minority and elderly borrowers;
     Possible improvements under existing federal laws and 
proposals for new protections;
     The role of state laws in stemming abusive lending;
     Predatory lending, the secondary market and the securities 
industry--from Main Street to Wall Street;
     The role of enforcement in stemming predatory lending 
practices under federal laws, such as the Fair Housing Act and RESPA;
     Counseling and consumer education; and
     Positive and negative effects of technology on predatory 
abuses.
    The agendas for each forum will be established in advance and made 
available by HUD through its web site (http://www.hud.gov) and through 
HUD's Office of Public Affairs. Following these forums, HUD will 
propose protections to address abusive lending practices.

    Dated: April 10, 2000.
Gail W. Laster,
General Counsel.
[FR Doc. 00-9284 Filed 4-11-00; 8:46 am]
BILLING CODE 4210-01-P