Evans Speaks Out Against Harmful Practice of Predatory Lending

March 29, 2018
Press Release

Today, Congressman Dwight Evans (Philadelphia and Montgomery County) testified before Philadelphia City Council’s Hearing of the Committee on Legislative Oversight. Councilman Kenyatta Johnson is the chair of the committee. The hearing, “Examining Racial Disparities In Home Lending, Also Known As Modern-Day Red-lining” was a chance for Congressman Evans to speak out against the harmful practice of predatory lending.

Congressman Evans was among the nearly fifteen concerned Philadelphians from both the government and private sector calling for an end to the destructive practice of predatory lending. 

“As a city and as a nation we are looking to put a stop to predatory lending. Residents in the city of Philadelphia, a city I have been proud to call home my entire life, have enough to worry about and should not be the victim of shady lending practices that seek to make a quick buck at the expense of our most vulnerable. I am in the business of ‘doing no harm’ and predatory lending practices run counter to my mission to help move our neighborhoods forward,” Congressman Evans said.

 

Here is the full testimony I delivered at today’s hearing:

 

Good morning,

I would like to thank Councilmember Johnson for convening this very important hearing on housing and bank lending practices.  These discriminatory practices are happening in Philadelphia and frankly, around the nation.  This morning I would like to provide some insight from a federal perspective on what the problem is and how we can fix it.

Unfortunately, if you look at the problem of predatory lending in urban areas across the nation, you could draw a straight line from the 1950’s as America began to integrate to the modern-day problems of redlining, predatory lending, and other harmful banking practices that have a disproportionate impact on Blacks and other minorities. 

And I don’t have to tell you that this is a big problem in our city as renters make up 50 percent of all households, according to the National Low Income Housing Coalition.

Yes, there are people who cannot afford to buy and simply rent; but there’s another class of people who can fully afford to buy but are held back by redlining, high interest rates, and unfair rules. 

Predatory loans are those that are not based on the borrower’s ability to repay the loan but more on their equity in the market.  Some examples of predatory lending include:

Loan flipping or excessive refinancing;
Equity skimming
Bait and Switch Tactics
Charge of Servicer
Credit insurance packing

At the federal level the Congressional Black Caucus has produced a document which I recommended entitled, We Have A Lot To Lose: Solutions to Advance Black Families in the 21st Century, which you may recognize from the last presidential campaign when the president used this phrase at a rally in Philadelphia to mock Black voters.  Our answer was then and still is now—we have a lot to lose. 

Based on that, and my experience, I offer that we must:

 

Build and Strengthen “middle neighborhoods across the country.  These are neighborhoods like Mt. Airy, Germantown, West Oak Lane, Roxborough, and Wynnefield, which are vulnerable to decline without a comprehensive approach to affordable housing.

 

Support the Community Development Financial Institutions Fund, or CDFIs, which support housing and other activities in low-income communities.  When we invest in CDFIs we are making a commitment to improve capital access and promote greater economic activity.

 

Work to strengthen the New Markets Tax Credit, between 2003 and 2015, $1.5 billion in NMTC allocation leveraged an additional $1.6 billion from other sources for a total of $3.1 billion in project investments to 147 Pennsylvania businesses and revitalization efforts, creating 41,596 jobs.

 

Encourage the expanded use of the Low Income Housing Tax Credit which has helped to house low income families in Philadelphia, and in effect, brought capital to underserved regions.

 

Require the Office of the Comptroller of the Currency which is part of the Treasury Department, to condition FinTech Charter conferral on applicant’s demonstrated compliance with truth-in-lending, equal access and CRA rules.  These best practices must be followed in order to operate nationally. 

 

Reauthorize the Community Development Block Grant program which supports housing rehab and local revitalization. 

 

Ensure equal access to homeownership opportunities by protecting the HUD funding and firmly exercise Congress’ Article I responsibility by ignoring President Trump’s request to cut HUD funding by $6 billion dollars.

 

And finally, let me give you an example of what we are up against in Washington with GOP control, and why you should go out and vote in every election.  Every week that we’re in Washington, which is called, “in Session,” the Financial Services Committee which has oversight over financial institutions, brings before the body a bill that undermines the important protections that came with the Dodd-Frank bill, that was passed in 2010. 

I will quickly analyze one of those, H.R. 4545, a bill that I voted against.  This bill’s supporters says that it gave the banks and other financial institutions a right to appeal an adverse finding by regulators, but in reality, it is a thinly-veiled attempt to  avoid the law put in place to force banks to be accountable to their borrowers. 

The reality is that as long as the GOP controls, we have to deal with bills like this with well-funded Wall Street supporters.

I promise to continue to fight to increase access to affordable housing, fight predatory lending, and promote economic development in the Commonwealth, and our great city.

 

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Media Contact: Becca Brukman, 202-225-4001, Becca.Brukman@mail.house.gov

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