Silicon Valley Campaign Launched to Prevent Predatory Lending Practices

At a press on Friday, a coalition of 10 private and public organizations including the City of San Jose, Freddie Mac, Neighborhood Housing Services Silicon Valley and the California Association of Mortgage Brokers launched a major public education campaign aimed at preventing predatory lending practices in Silicon Valley. The coalition has established a toll free consumer help line that will be staffed by trained professionals who can offer free assistance to individuals seeking information about purchasing a home, refinancing, consolidating debt, taking out a home-equity loan, and mortgage foreclosure prevention. Individuals can also be referred to appropriate legal or financial experts.

The Don’t Borrow Trouble® Silicon Valley campaign utilizes brochures, the http://www.dontborrowtrouble.com and http://www.sjhousing.org Web sites, radio and television public service announcements and workshops throughout the community to educate consumers who are most vulnerable to predatory lending practices, including the elderly, minorities and low- to moderate-income individuals. By combining advertising and face-to-face consumer education and housing counseling, the campaign helps consumers avoid abusive lending practices, such as exorbitant interest rates, excessive fees and pressuring tactics.

The campaign encourages consumers to call the Don’t Borrow Trouble Silicon Valley referral line at (408) 283-1284. It is hoped that individuals will use these resources for advice before they get into financial difficulty when purchasing a home, refinancing, consolidating debt, or taking out a home equity loan. The help line is also a resource for those who find themselves currently in trouble with foreclosure.

“Potential home buyers who face language difficulties, are elderly, or who are socioeconomically challenged face greater obstacles to obtaining fair mortgages, and are much more vulnerable to predatory practices by unscrupulous lenders,” said Rep. Mike Honda (D-Calif.), chair of the Congressional Asian Pacific American Caucus. “The Don’t Borrow Trouble campaign will help consumers avoid these pitfalls by providing helpful resources and educating them about best practices.”

“Education is an essential tool in the fight against predatory lending,” said Rep. Zoe Lofgren (D-Calif.). “I welcome the Don’t Borrow Trouble campaign to San Jose and hope that it will help combat this terrible practice by teaching our community’s most vulnerable citizens ways to protect themselves.”

“Predatory lending practices attack the heart of our communities. These practices can strip away home equity and trap unwary borrowers in a dismal cycle that ultimately replaces homeownership with foreclosure,” said Craig Nickerson, vice president of Expanding Markets for Freddie Mac. “Don’t Borrow Trouble is a proven method to help stop predatory lending and to keep families in their homes, build wealth and strengthen communities. These organizations should be commended for banding together and combining their resources to educate consumers on the perils of predatory lending practices.”

Moses Diaz, coordinator of Anti-Predatory Lending Litigation for the Fair Housing Law Project added, “Predatory mortgage lending costs homeowners an estimated $9.1 billion annually. Don’t Borrow Trouble Silicon Valley’s education and outreach campaign is a good first step. However, stronger consumer protection laws at both the state and local level are still needed to curb abusive lending practices.”

“The Council is to be commended for its enlightened approach to outreach and education,” said Paul Stewart, executive director of the Santa Clara County Association of REALTORS®. “They understand that an educated consumer is the best defense against predatory lenders.”

“The Don’t Borrow Trouble campaign is an excellent program that reminds both Silicon Valley lenders and borrowers to proceed with caution,” said Ed Moncrief, executive director, Neighborhood Housing Services Silicon Valley. “Loan agents have a responsibility to protect their client against an uncertain future. When loan agents fail in this responsibility, it is the client, not the loan agent that may face the devastating loss of his or her home.”

Organizations participating in this campaign are Bay Area Legal Aid, California Association of Mortgage Brokers, City of San Jose, Fair Housing Law Project, Freddie Mac, Neighborhood Housing Services Silicon Valley, Pro Bono Project Silicon Valley, Project Sentinel, Santa Clara County Association of Realtors and Working Partnerships USA.

Predatory lending practices strip equity away from homeowners, by repeatedly refinancing a loan within a short period of time and charging high points and fees with each refinance; packing a loan with single premium credit insurance products like credit life insurance, and not adequately disclosing the inclusion, cost or any additional fees associated with the insurance; or charging excessive rates and fees to a borrower who qualifies for lower rates and fees.

Pioneered in Boston by Mayor Thomas M. Menino and the Massachusetts Community and Banking Council, Freddie Mac is the principal sponsor of Don’t Borrow Trouble’s expansion throughout the United States. Freddie Mac has brought the campaign to 40 locations across the country, and has received more than 100,000 inquiries to the Campaign’s help line.

Freddie Mac is a stockholder-owned company established by Congress in 1970 to support homeownership and rental housing. Freddie Mac fulfills its mission by purchasing residential mortgages and mortgage-related securities, which it finances primarily by issuing mortgage-related securities and debt instruments in the capital markets. Over the years, Freddie Mac has made home possible for one in six homebuyers and nearly four million renters in America. http://www.FreddieMac.com