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Community organizations won a major step towards national policy reform on predatory lending after a representative of the Federal Trade Commission (FTC) committed to meeting with National People's Action (NPA) members to create the first-ever national definition for predatory lending at a meeting with the East Side Organizing Project in Cleveland, OH.

And within two days, the FTC backed out on its commitment to community organizations across the country.

“Predatory Lending Police" arrest a loan shark| at
the Chicago hearing on Oct. 25.

In response to questions from national media outlets, Ron Isaac, assistant to the director of consumer protection at the FTC, said the FTC is not interested in creating a definition for predatory lending despite his promise at the Cleveland hearing and said that the federal agency will not meet with NPA on this issue.

The Cleveland hearing was the third in a series of seven hearings being held across the country sponsored by NPA and local organizations. The FTC is attending all seven hearings.

Following up on the FTC's broken promise, the South Austin Coalition Community Council (SACCC), the Southwest Organizing Project (SWOP) and Nobel Neighbors challenged Isaac at the fourth hearing in Chicago on Oct. 25.

"We want the FTC to provide clear and precise rules against predatory lending that would prevent bad lending and allow the government to attack loan shark violators in a court of law," said Minister Frankie Freeney of Nobel Neighbors.

Isaac responded that the FTC had concluded that defining predatory lending practices is not in the best interest of American consumers.

Under the FTC Act, the FTC has the rule-making authority to define predatory lending practices as "unfair or deceptive acts or practices in or affecting commerce," giving the FTC the ability to make regulations that would outlaw these abusive lending practices.
NPA will continue to press the FTC for a meeting at the remaining hearings and beyond.

"The FTC knows they have the power and that we have the will, to define specific predatory lending practices that the FTC can declare as illegal," said Inez Killingsworth, NPA co-chair.

Both ESOP in Cleveland and the three community groups in Chicago used the hearings to challenge local and state officials to work with the organizations to combat predatory lending practices in their area.

At the city-wide Chicago hearing, groups announced the development of a joint agreement between Chicago community organizations and state mortgage regulators to develop a pilot project to seek out homeowners ripped off by predatory lenders in three Chicago neighborhoods.

The innovative pilot project will provide a mechanism for the two state financial regulating agencies, the Office of Banks and Real Estate and the Department of Financial Institutions, to identify predatory lenders in the three-targeted neighborhoods.

Once the state agencies receive complaints, they are able to investigate mortgage companies for fraud, deceptive practices and predatory lending practices and enforce sanctions against the violators.

"I am very excited about this project. We are looking for predatory loans before they go to foreclosure," said SWOP treasurer Jeri Shinners.

At the ESOP hearing, staff for Rep. Stephanie Tubbs-Jones (Cleveland-D) committed to sending a letter to Robert Rubin, chairman of the executive committee urging him to meet with NPA. Tubbs-Jones sent the letter in late fall.

NPA has been targeting Citigroup for a year since it acquired the Associates in October 2000 and became the largest predatory lender in the country.

Tubbs-Jones also sent a letter to Ohio's Attorney General, Betty Montgomery, to meet with ESOP on targeting local predatory lenders, including Citigroup.

Since the meeting, ESOP leaders have been meeting with state officials to have them urge Montgomery to meet with the organization.Insert Content Here