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CHICAGO-On Feb. 1 over a 250 community leaders told state banking regulators that the passage of proposed anti-predatory regulations is the next necessary step in stemming thousands of foreclosures across Illinois due to predatory lending practices.

In a public hearing more than 20 Illinois community groups testified to the Office of Banks and Real Estate (OBRE) and the Department of Financial Institutions (DFI) on how predatory lending has devastated their credit, their homes and their communities. They also worked to counter the arguments given from bank representatives and mortgage brokers who were also present at the hearing.

Proponents urged that regulators and state legislators pass the regulations quickly and without any changes. "You remember in the great Jimmy Stewart movie, It's a Wonderful Life, how the hero George Bailey doesn't appreciate the good he's done until the angel Clarence reminds him of the people he helped to get and keep their own homes. I don't think you need Clarence's reminder for you to appreciate what a difference you can make when you stand up to special banking interests and help people keep their homes, by helping them with the effective regulations you have before you," said Michael Brennan, of the Chicago-based Metro Seniors in Action.

Daisy Thompson, a member of the Chicago Loan Shark Task Force and a victim of predatory lending also spoke out against predatory lending and told her story to the regulators.

After buying her house outright in 1985, Thompson needed a loan for home improvements. While only looking for a $15,000 loan, Thompson was maneuvered into signing a loan with Unlimited Financial Services for $55,000. After charging her a $6,700 fee and a 14 percent interest rate, Thompson only received $2,000 in cash and is unable to pay back the rest of the loan. Currently, Thompson is fighting against the foreclosure of her home.

To protect thousands of Illinois homeowners from these kinds of unscrupulous lending practices, Gov. George Ryan and Illinois state legislators introduced both regulations and legislation to prohibit predatory practices that result in foreclosure.

Gov. Ryan and the two state regulating agencies, OBRE and DFI, introduced anti-predatory regulations in December. The proposed regulations prohibit predatory practices such as balloon payments for high-cost loans.

"Homeowners and neighborhoods in every community in Illinois face a clear and present danger from predatory lenders, who today are able to roam the state at will," said James Capraro, co-chair of the Southwest Organizing Project (SWOP) and executive director of the Greater Southwest Development Corporation.

State Rep. Dan Burke (D-Chicago), who championed anti-predatory legislation last year, plans to reintroduce his bill in the 2001 legislative session.

The proposed regulations are modeled on the Chicago anti-predatory lending ordinance which was negotiated by the banking industry and community groups, and which the city council passed in August. However, they include an important prohibition on single premium credit-insurance, which was left out of the city ordinance. Single-premium credit insurance steals equity from borrowers, which may result in foreclosure and is already prohibited by Fannie Mae and Freddie Mac.

The increase in foreclosures and the testimony of homeowners tell an irrefutable story of the damage that is being done to individuals, families and communities across the state.

Recent analysis by NTIC shows that Chicago-area foreclosures started by sub prime lenders across Chicagoland have increased from 131 in 1993 to 4,958 in 1999. In Springfield, the number increased from 3 in 1993 to 150 in 1999.

Behind these numbers lie the stories of individuals and families who have been tricked out of their money and had their homes stolen from them Due to lack of regulation, predatory lenders are able to run rampant and homeowners are left with little ammunition with which to fight them.

While community groups applaud the initial efforts of Gov. Ryan and Rep. Burke, their next effort is to make sure that the regulations and legislation are passed.