A consumer organization says new federal predatory lending guidelines are vague and riddled with holes.
The National Community Reinvestment Coalition (NCRC) lambasted guidelines issued by the Office of the Comptroller of the Currency today covering the conduct of national banks and predatory, abusive, unfair, or deceptive residential mortgage lending practices.
While the guidelines describe particular practices that are inconsistent with sound residential mortgage lending practices, they fail to adequately define them or provide meaningful consumer or fair lending protections, NCRC said. For example, the guidance:
• Does not establish a tangible net benefit standard for each borrower;
• Does not prohibit the use of mandatory arbitration;
• Does not address the prevalence of appraisal fraud in the marketplace;
• Does not provide adequate consumer protections for expensive "add-on" products to loans, i.e., credit life;
While the new guidance presents a good "spin" on the issue, it affords little or no new protections for commonplace practices that have been documented and challenged by NCRC directly through its work in lender best practices, its national Anti-Predatory Lending Consumer Rescue Fund, and by sub-prime mystery shopping of financial service institutions in concert with NCRC's over 600 members across the country.
"While the intent of the new guidance may be honorable, the OCC misses the mark with their guidelines," said John Taylor, NCRC president.
"Congress must act to enact a meaningful national Anti-Predatory lending standard that clearly addresses these issues in a meaningful way and the OCC should not assume the role of legislator. While this guidance attempts to address common predatory practices, in fact, these standards provide little new consumer protections in our communities," Taylor said.
