Swanson targeting predatory lending

12/08/2006

The incoming attorney general wants to tackle predatory home lending that she said has fueled a spike in foreclosures.

Star Tribune
Last update: December 07, 2006 – 9:27 PM


In her first policy initiative since being elected state attorney general last month, Lori Swanson called Thursday for tougher laws against abusive home mortgage practices known as predatory lending.


A sharp spike in mortgage foreclosures -- more than 2,000 in Minneapolis and St. Paul alone this year -- suggests that many homeowners, especially those with poor credit who resort to subprime lenders, are being conned by "exotic" and deceptive mortgage pitches, Swanson said.


At a State Capitol news conference on Thursday, she named a 12-member study group to draft legislation for submission to the Legislature in January. She called for measures that would:


• Require verification of a borrower's ability to repay a loan.


• Prohibit or limit prepayment penalties.


• Restrict refinancing, or "churning," of loans.


• Require more disclosure of broker compensation, taxes and interest.


The committee includes two DFL legislators, Sen. Linda Higgins of Minneapolis and Rep. Debra Hilstrom of Brooklyn Center, Minneapolis City Council Member Barb Johnson, University of Minnesota Law School Prof. Prentiss Cox, Kurt Weise of Central Bank, Rodger Bense of Long Prairie State Bank, Ron Elwood of the Legal Advocacy Services Project, Jordan Ash of the Minnesota Financial Justice Center, community activist Sherm Patterson, Ed Anderson of Cub Foods and Re/Max Realtors William Saunders and John Collopy.