WASHINGTON – A pair of Maryland leaders called for tougher anti-predatory lending laws after an economic justice group released a study Thursday showing minorities and immigrants nationwide are more likely to be victims of predatory loan practices.
The study, conducted by the National Community Reinvestment Coalition, illustrates a “crisis” confronting minorities seeking to own a home, said Montgomery County Council Member Tom Perez, D-Silver Spring, and Gustavo Torres, executive director of CASA of Maryland. Perez defended a bill cracking down on predatory lending in Montgomery County, but panned congressional efforts to combat such practices.
“We believe this represents a clarification of the predatory lending going on in Maryland and in the nation,” Torres said in an interview. “This is a crisis that thousands of people face every day in Maryland. We’re speaking about day laborers, workers and others in the Hispanic community, as well as other groups.”
Perez criticized a House bill sponsored by Reps. Brad Miller, D-N.C., Mel Watt, D-N.C., and Barney Frank, D-Mass., that would punish lenders for unfair activities. Last year, Montgomery County Council passed a bill sponsored by Perez that raised the amount of damages consumers could seek from predatory lenders from $5,000 to $500,000 and expanded the definition of lending activities.
The NCRC study found that minorities were more likely than whites to receive home loans at high interest rates — known as “subprime” rates — across all economic levels. The data was taken from the 2004 Home Mortgage Disclosure Act.
“This is discrimination with a smile — one of the most challenging civil rights battles of the new millennium,” Perez said. “Anyone who is surprised by anything in this report hasn’t been following the issue.”
African-Americans, who composed more than one-tenth of all households, received about 20 percent of all subprime loans. The disparity was wider for Hispanics, who accounted for 9 percent of households, but received more than 21 percent of subprime loans.
Among immigrants, the study showed that borrowers with higher income levels were more likely to have a subprime loan. While low-to-moderate-income immigrants were less likely than whites to have a subprime loan, those in the middle-to-upper-income bracket were more than one-and-a-half times as likely as whites to fall into this category.
The findings hold true in Montgomery County, where upper-income African-Americans are 12 times as likely as whites to be given a subprime loan, Perez said. He said he opposes any federal legislation that would negate state and local laws.
“With all due respect, I have no confidence in this administration,” Perez said. “I don’t want to take a leap of faith and put all of our eggs in one basket.”
Recent U.S. Census data has shown that the rate of business ownership increased sharply from 1997 to 2002 among blacks and Hispanics — 46 percent and 37 percent, respectively, but unfair lending practices threatens those gains, said John Taylor, NCRC president.
“(The study) clearly outlines that regardless of how much money you make, if you are part of the traditionally underserved, then odds are you are receiving a high-cost loan,” Taylor said. “That makes it difficult to keep your home, manage your bills and to build inheritable wealth in this country.”
Torres said he sees the tangible results of illegal lending practices every day in places such as Langley Park.
“People ask, ‘Why are these neighborhoods so poor?'” Torres said. “We have the answer right here.
“The American dream has become a nightmare for the immigrant community as a result of predatory lending. These are the people who are the victims,” he said, referring to thousands of Hispanics who marched last week in protest of legislation punishing illegal immigrants.
On Tuesday, the County Council will hold a public hearing on the bill, and Perez said he expects to have “a robust discussion” with the bill’s opponents, including Council Members Mike Knapp, D-Upcounty, and Howard A. Denis, R-Bethesda.
“This bill won’t be repealed,” Perez said. “If people want to change the language a little, I’m all ears.”
But Perez already knows what his adversaries will argue.
“They’re going to say it’s a solution to a nonexistent problem,” Perez said. “I wish they were right. My experience tells me they’re dead wrong.”
– 30 – CNS-4-20-06