Officials Aim to Curb Loan Sharks

By Hyman, Julie | The Washington Times (Washington, DC), July 10, 2000 | Go to article overview
Save to active project

Officials Aim to Curb Loan Sharks

Hyman, Julie, The Washington Times (Washington, DC)

Ella R. Johnson lives in a quiet suburban neighborhood in Southeast Washington, in a home adorned with silk flowers and pictures of grandchildren and foster children. She may not be there much longer.

On June 16, marshals arrived with an eviction order to remove Mrs. Johnson, 76, and her 101-year-old mother from the house they purchased together nearly 10 years ago.

Mrs. Johnson said the marshals were stopped by the sight of her mother, Susie R. Brown, who will turn 102 later this month. They said they would need an ambulance to remove Mrs. Brown from the house, and that they would return in a few days.

The women's troubles began when Mrs. Johnson became ill a few years ago and fell behind on her mortgage payments because of medical bills. In 1996, she decided to take out a loan to catch up with payments.

Three years later, another lender, who had purchased the loan, foreclosed on her house. Mrs. Johnson claims she was the victim of so-called "predatory lending" practices by mortgage lenders, and stories like hers have inspired a movement to quell such abuses.

Critics say unscrupulous lenders target elderly members of minority groups, frequently women, with deceptive tactics. Though the problem is not new, rising public concern has prompted federal and local governments to consider a crackdown.

The departments of Housing and Urban Development and Treasury issued a report June 20 defining abusive lending practices and proposing regulatory and legislative remedies.

Consumer advocates cheered the proposals, as well as efforts by states, other regulatory agencies and members of Congress to take aim at predatory lending.

"Almost every part of the lending process can be manipulated into predatory behavior if the participants so choose," said Roy Green, legislative representative for housing and financial services at AARP, the over-50 advocacy group.

The HUD/Treasury report highlighted several tactics as "predatory," including:

* flipping - when lenders convince borrowers to frequently refinance their mortgages, charging high interest and fees;

* balloon payments - low monthly payments that balloon at the end of the loan;

* deception of national credit bureaus about borrowers' credit history to justify high rates.

Abusive loans are confined to the subprime, or high-interest, loan market. But not all subprime loans are abusive - they do provide opportunities for borrowers who cannot get loans from conventional lenders.

Subprime loan originations rose to $160 billion in 1999 from $35 billion in 1994. Total originations in 1999 amounted to $1.275 trillion.

But predatory loans are difficult to measure, since their definition is fluid and they are not clearly visible from examining balance sheets.

The amount of abusive loans is "anybody's guess really," said John Bancroft, managing editor of Inside Mortgage Finance in Bethesda, the source of the subprime figures.


Mrs. Johnson fits the typical profile of an abusive lending target, according to consumer advocates. She is elderly, black and female.

"I can't emphasize enough that this is a civil rights issue," said William J. Brennan, director of the Atlanta Legal Aid Home Defense Project, at a recent predatory lending forum at the Library of Congress.

Mrs. Johnson bought her house with Mrs. Brown for $167,000 in 1991, after her brother, who had been caring for her mother, passed away.

She was a government office worker and a foster mother, but has given up all work except a baby-sitting job to devote her attention to her mother, whom she cares for with the help of an aide.

"I try to do all I can, but it's really got me," she said during a recent interview at her home. "It's not easy, baby, it's hard."

A few years ago, Mrs.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Cite this article

Cited article

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited article

Officials Aim to Curb Loan Sharks


Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen

matching results for page

Cited passage

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?