Fed holds hearings on predatory lending

The Federal Reserve Board is holding a series of public hearings on predatory practices in the home-equity lending market.

The last two hearings in a series of four will be held Aug. 16 and Sept. 7 in Chicago and San Francisco, respectively. The hearings are conducted under the authority of HOEPA, the Home Ownership and Equity Protection Act of 1994, which imposes disclosure requirements and other limits on certain high-cost, home-secured loans, according to a press release from the federal reserve board.

Consumers, consumer advocacy organizations, lenders and other interested parties have been invited to participate in panel discussions on how the board might use its rule-writing authority to curb predatory practices in home-equity lending while preserving access to credit for borrowers with less-than-perfect credit ratings.

HOEPA was enacted in response to reports of abusive lending practices by unscrupulous lenders making unaffordable home-secured loans. Frequently, elderly and sometimes unsophisticated homeowners were targeted for loans with high rates and fees, and repayment terms that were difficult or impossible to meet. Such transactions often involved fraud or unlawful misrepresentations by lenders or brokers.

The hearings seek public views about home-equity lending in general, but focus specifically on ways the board might use its authority. HOEPA authorizes the board to adjust the high-cost triggers that could affect the scope of the act's coverage, and it directs the board to prohibit certain mortgage lending acts and practices if the board makes the findings required by the statute.

The transcript of the July 27 hearing, held in Charlotte, N.C., is now available online at www.federalreserve.gov/Events/PublicHearings/20000727/.