Predatory Lending in San Jose
Hoping to better protect San Jose homeowners from predatory lenders -- those who make loans marked by excessive fees and prepayment penalties -- city council members this week organized a group of community advocates, realty agents and lenders to work on a solution.
The groups are generally on opposite sides in the divisive battle over predatory loans, a complex political issue that led to recent lawsuits across the state and nation, including in Oakland and Los Angeles.
Until now, both sides in San Jose were headed for a public fight over a proposed city ordinance regulating the loans. City leaders hope to avoid that by asking the sides to find common ground.
'Everyone involved in this coalition is very interested in cutting to what the problem is and what the problem is not,' said Steve Preminger, chairman of the Santa Clara County Democratic Party and a leader in the local movement for an ordinance. 'Once we do that, I think we can come up with something that both sides can live with.'
The city council members, who voted 11-0 Tuesday to organize the coalition, asked the group to report on its progress by Nov. 18.
The coalition will include at least five members from each side of the issue.
Victims of predatory loans tend to be low-income, non-English-speaking borrowers, the elderly and those with credit problems, advocates say.
Groups such as ACORN, the Public Interest Law Firm and the Fair Housing Law Project have been pushing for a city ordinance.
Since May, they have met with individual city council members, hoping to gain support for rules they say would protect potential victims of predatory loans, who sometimes lose their homes as a result of the practice. Among other things, the proposed rules would require certain borrowers -- those with high-interest-rate loans and other restrictive terms, such as prepayment penalties -- to meet with loan counselors before signing a contract.
Realty agents and lenders argue that restrictive new laws could drive lenders away from what is called the sub-prime market.
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