Predatory Lending Bill Dies
Ray Carter The Journal Record, THE JOURNAL RECORD
A bill targeting "predatory" lending failed to pass the House Banking and Finance Committee on Tuesday due to concerns that the measure would target many financial institutions that do not engage in the activity.
House Bill 2144, by Rep. Opio Toure, D-Oklahoma City, would make certain "high cost" home loans illegal, based on a wide range of factors, including interest rates and payment schedules.
The measure failed on a 6-9 vote.
Toure said some of his elderly constituents have lost their homes due to unscrupulous lenders who convinced those people to refinance their homes with loans they could not repay.
Because elderly people have often been the victim of predatory lending, the American Association of Retired Persons endorsed Toure's bill.
Toure said his bill is not designed to prevent banks and credit unions from approving loans to the "subprime" market, which is comprised of people with troubled credit histories.
He said the bill was a "work in progress" that would continue to change as it made its way through the system.
"What you have at this point is a draft," Toure said, adding that no detail in the bill was "set in concrete."
But several lawmakers said they feared the bill could harm the subprime lending market. Rep. Fred Perry, R-Tulsa, said the bill could cause lenders to pull out of the subprime market, leaving many poor Oklahomans without access to funding.
"We could make it difficult for some of those folks to buy a home," he said.
Toure said he did not want the bill to destroy the subprime market, noting that over 50 percent of the loans in his district are considered subprime.
"There's a tightrope that we have to walk and make sure we don't dry up sources of funds for consumers" while driving predatory lenders out of the market, Toure said.
But financial officials said Toure's bill was too broad and would have a chilling effect on subprime lending.
"There isn't anybody in this room who can define, with any precision, what is and what isn't a predatory loan," said Roger M. Beverage, president of the Oklahoma Bankers Association.
He said most people agree that a "predatory" loan is designed so the borrower cannot pay back the loan and the lender can seize the property involved.
Most banks, credit unions, and savings and loans wouldn't provide that type of loan because of regulatory oversight, he said. And Beverage noted that there have been no accusations of predatory lending levied against any state-chartered or federal-chartered financial institutions in Oklahoma.
One lawmaker said the bill could cause new regulatory headaches for lenders. Rep. Loyd Benson, D-Frederick, noted that Toure's definition of a "high cost" home loan differed from the federal definition, which would force Oklahoma lenders to meet two different standards for the same activity. …