Brooklyn Borough President Marty Markowitz Urges City Council, Mayor to Enact Legislation to Prevent Predatory Lending

Citing the soaring rate of failing mortgages among New York’s low-income families, Brooklyn Borough President Marty Markowitz testified before the City Council Committee on Consumer Affairs to urge the Council and Mayor to enact legislation to discourage and punish mortgage brokers and companies that engage in predatory lending.

"Our urban families are being destroyed," said Borough President Markowitz. "Communities of color in particular are being preyed upon by unscrupulous lenders, and it’s up to us to make sure this insidious practice stops."

Predatory lending involves targeting homeowners who have borrowed money and are falling behind on their payments, hospital bills or utility bills. Homeowners are encouraged to consolidate all of their debt into a mortgage, which seems to make sense, but which often has enormous hidden costs and excessive interest rates. Another tactic involves home improvement contractors persuading homeowners to sign high-interest rate mortgages to finance home remodeling. Often homeowners are misinformed about interest rates and monthly payments, and the renovations are usually done shoddily or not at all.

While some measures have been taken to counter predatory lending, including lawsuits and State Banking regulations, the practice continues to be widespread.

Intro. 67, which is sponsored by Council Speaker Miller and several other Council members, would punish predatory lenders and their affiliates financially:

• They would be denied City grants, loans or tax incentives.
• They would be barred from City purchasing contracts.
• They would be prohibited from accepting City deposits.

And the City, including its pension funds, would be prohibited from investing in predatory lenders or their affiliates.

Borough President Markowitz also urged the New York State Senate to enact the Responsible Lending Act, which would create legal defenses to foreclosures and allow victims of predatory lending to keep their homes, and would prohibit lending without regard to a person’s repayment ability. The Act passed the Assembly last June. "Now the Senate must act," concluded Borough President Markowitz, "so that we will finally stop this widespread epidemic of urban economic violence."