ACORN wants tighter regulation on sub-prime loans
By Adam Allington, KWMU
St. Louis, MO – The community non-profit group ACORN has launched a national campaign pushing for stiffer regulation of the sub-prime loan industry. The group held a rally at the Federal Reserve Bank in St. Louis earlier today.
The Home Ownership Equity Protection Act, called HOEPA, is the law that gives the Federal Reserve the power to regulate the market for sub-prime loans. The loans are often called "predatory loans" because they tend to target low income borrowers and start out at one interest rate and then jump up after a few years.
Jeff Ordower of the watchdog group ACORN says current HOEPA laws are not tough enough and communities are being torn apart by predatory lending and foreclosures.
"People don't have advocates in the process, they don't understand what they're doing and they're frequently misled because the paperwork is so complicated."
Joe Elstner, a spokesman for the Federal Reserve says the sub-prime loan industry is already regulated under many state and federal laws.
"We want deceptive lending practices to be discontinued, but at the same time it is important to maintain a responsible, well functioning sub-prime lending market. So we're interested in both of those things occurring."
According to ACORN statistics foreclosures in Missouri were up by 53 percent in 2006, with over 12,000 foreclosures in St. Louis alone.
The Federal Reserve will hold a hearing next week in Washington on the issue of predatory lending.