Yes, It's Still Happening

Predatory lending sounds like the kind of thing that went on during those go-go boom years when the real estate sector was like the wild west and low-income Americans were treated as easy prey by companies intent on a quick profit. But predatory lending has always been about much more than deceptive home loans at usurious rates. It describes a whole range of exploitative lending practices, many of which depend on misleading borrowers so they don't know what they are getting into.

The good news is that help is on the way, with the imminent creation of the Consumer Financial Protection Agency and the appointment by President Obama this month of crusader Elizabeth Warren to lead this effort. But it will be a long fight. Greed never rests.

Dodd-Frank Bill Looks To Curb Predatory Lending Abuses

In the 2010 Dodd-Frank Reform bill recently agreed upon by members of the House Financial Services Committee and the Senate Finance Committee, lawmakers will create a consumer financial-protection bureau at the Federal Reserve to police banks for mortgage-lending abuses. The bill must be approved by both the House and Senate before it can be signed by President Obama.

The 2010 financial reform bill brings many widely differing state regulations under a federal umbrella : (1) consumers with adjustable-rate or other complicated mortgages can no longer be fined for paying off their mortgage early. Currently some borrowers face rates so high that it is too difficult to get out of a mortgage if they think they have been given a bad deal; and (2) bankers can no longer get bonuses for the types of mortgages they sell, reducing the incentive to write off riskier loans.