New Local Predatory Lending Law Targets Minority Zip Codes

by Mike Bevel, CollectionIndustry.com

A new law set to take effect in Chicago next month hopes to keep homebuyers from entering into loan agreements beyond their means. Only by ?homebuyers? the law actually means African American homebuyers.

Of course the law doesn?t explicitly say ?African American homebuyers.? That would be illegal. Instead, the law applies only to 10 Chicago zip codes ? and five of those zip codes just happen to be in predominantly black neighborhoods.

Vincent Barnes, executive director of the Rebirth of Englewood Community Development Corporation, told the Chicago Defender that while he does not believe the law was meant to be discriminatory, it targets potential borrowers based on their race and where they live.

“Our concern is that African Americans are being treated differently. I’m all for education for everybody who buys a home, but African Americans are required to do extra to buy a home,” Barnes said. “This is de facto discrimination.”

Sue Hofer, spokeswoman for the state’s Department of Financial and Professional Regulation, sees it differently: This is not nefarious, it’s not a plot and it?s not redlining. We want to create educated consumers,” Hofer said. “In the best world, credit counseling would convince people not to purchase property they cannot afford.”