A young couple in a Southwest Side community receives a home loan before getting all the information they need. The result, to their dismay, is that the loan includes all kinds of hidden costs. That’s when the couple hears a word they hoped they would never hear: foreclosure.
We know the cause of this all-too-common situation: predatory lending. Far too often, consumers are prey to predatory lenders who con consumers into paying more than they can afford.
Fortunately a pilot program in Illinois that combats predatory lending is benefiting consumers, communities and honest lenders. Through this new program, the Predatory Lending Database Pilot Program, the Illinois Department of Professional Regulation tracks mortgage transactions in 10 of the hardest hit ZIP codes in the Chicago area in a predatory lending database.
Meanwhile if a loan meets certain triggers, a borrower is referred to counseling with a Department of Housing and Urban Development-certified housing counseling agency.
Now, however, a few critics claim that this program is somehow “redlining” those communities. We have seen these scare tactics before; they spread a false message and can distract people from the very real dangers of predatory lending.
In reality, by law, the program targets only communities with high foreclosure rates, not specific groups of people.
Meanwhile a few critics claim that people in these communities will not be able to get a loan at all. Let’s take a look at what lenders are really doing.
Yes a very tiny percentage of lenders say they are pulling out of certain neighborhoods because of this program. An even larger number of lenders, however, are redoubling their efforts to lend in these communities.
Bottom line? Consumers who want to find a responsible lender in these communities will be able to do so. Consumers are also benefiting from education provided through this new program.
