Oklahomans losing homes to predator lending practices
Thursday, November 6th 2003, 12:00 am
By: News On 6
OKLAHOMA CITY (AP) -- Bertha Morgan says she is humiliated and homeless because of predatory lending practices.
"I have lost my home and I am about to lose my car," the 72-year-old Bartlesville woman told the House Banking Committee Thursday. The panel is conducting an interim study on loan practices.
She testified of being "pressured" into a number of loans on her home and then pressured into making payments she did not think she owed.
One of the loans, she said, was to buy siding for her home.
She said of the experience: "You feel dirty. You feel degraded and you go under."
Cynthia Bower of Inola also said she was losing her home because of finance charges, including one for a second mortgage that she had not bargained for when she talked to the finance company.
She said she and her husband took out the loans after his pay was cut and she became ill, requiring two surgeries.
"We didn't realize what had happened to us until we were $3,000 behind on payments and couldn't catch up," Bower said. She said the way the loans were structured gave the finance company "a license to steal."
Bower said the lender recently sent her a letter offering her $1,200 if she did not take part in a class-action lawsuit against the finance company.
Uriah King, official with the Self-Help Community Credit Union Center for Responsible Lending, said Morgan and Bower were victims of predatory lending practices that had swept the country in recent years, robbing homeowners of their equity.
Unfortunately, a new Oklahoma law designed to curb such practices will not stop many abuses, King said.
The law limits upfront fees to 8 percent on mortgages, but that can climb to 15 percent if fees are tacked on the end of the loan, King said.
"The law doesn't do anything to prevent flipping," he said of a practice whereby homeowners are lured into repeated, high-cost loans that often lead to foreclosure.
King said a North Carolina law that limits fees, or points, to 5 percent has not dried up loan capital in that state, as opponents had predicted.
He recommended that high-risk loans be handled with higher interest rates and not points or other devices that consumers do not understand.
He said the many disclosures in state and federal laws do not prevent abuses and often confuse homeowners.