New York's Senator
CHARLES E. SCHUMER

FOR IMMEDIATE RELEASE May 30, 2001

SCHUMER, JACKSON ANNOUNCE NEW PARTNERSHIP TO FIGHT PREDATORY LENDING WITH NY BANKERS ASSOCIATION, FANNIE MAE

New initiative, prompted by Schumer report, seeks to increase home ownership in minority communities and stop predatory lending before it starts

US Senator Charles E. Schumer, Reverend Jesse Jackson, the New York Bankers Association (NYBA) and Fannie Mae today unveiled the House Equity Lending Project (HELP): a pilot program aimed at reducing predatory lending in New York City. The initiative - a collaborative effort of New York conventional lending institutions, faith-based organizations and Fannie Mae prompted by a 2000 Schumer report on predatory lending practices - seeks to increase access to conventional loans in New York City minority communities by providing residents with counseling assistance, direct access to major conventional lenders and consumer education programs.

"When it comes to access to conventional lending institutions and the presence of subprime lenders, blacks and whites in New York City may as well be living on different planets, " said Schumer. "By bringing together the leading mortgage lenders, Fannie Mae and our faith-based organizations, this initiative will help bridge the lending divide and put predatory lenders out of business."

"In the Bible, we observe, birds have nests, foxes have holes but the son of man has no place to lay his head. Therefore, one of the most important steps in obtaining dignity and self determination is home ownership," said Jackson.

"Fannie Mae has long been concerned about predatory lending and we strongly support a Mortgage Consumer Rights agenda," said Jamie S. Gorelick, Vice Chair, Fannie Mae. "We believe the mortgage finance industry must protect consumers against abuse, and establish standards for responsible lending. Working with lenders, non-profits, faith-based organizations, and other parties, Fannie Mae is committed to provide families with greater opportunities for long term homeownership."

"We are pleased to announce the establishment of a new 'home loan hotline,' financed by New York Bankers Association and Fannie Mae to help bridge the gap. We commend Senator Schumer, Fannie Mae, the participating church leaders and our member banks for their leadership and commitment to this partnership," said Michael P. Smith, President of the New York Bankers Association.

The increasing need for mortgage loans in predominantly black communities, coupled with a lack of conventional lenders in many neighborhoods, has created a void within New York City's loan market that has been infiltrated by predatory lenders.

The extent of the void was chronicled in an April 2000 Schumer report entitled, "Capital Access: Lending Patterns in Black and White Neighborhoods," which found that black neighborhoods were six times as likely as white neighborhoods to rely on subprime lending institutions which charge much higher rates and origination fees than conventional banks and often use predatory practices to attract new borrowers. The report also found that individuals residing in predominantly white neighborhoods were far more likely to obtain conventional financing for home purchasing than those who reside in black neighborhoods of comparable income levels

The HELP program seeks to address this disparity by improving access to lower cost loans from conventional lending sources in communities that have high incidence of subprime lending. The program would help stimulate economic growth, curb predatory lending and build trust and credibility of conventional lending institutions within minority communities. The initiative will initially be launched in the Southeast Queens and Central Brooklyn neighborhoods, in conjunction with Allen AME and Bridge Street AME Church, and will feature the following:

1. An (800) number operated by the New York Bankers Association to give residents access to mortgage loans for home purchase or refinance. The hotline will put residents in touch with the nine banks that are participating in the pilot. The banks will then offer consumers lowest-cost products for which they qualify, as well as referrals to an active network of credit and housing counseling agencies. Fannie Mae will purchase many of the loans and support the nine banks in any way they can. The participating lenders include J.P. Morgan Chase, Citigroup, Fleet, DIME/NAMCO, Bank of New York, EAB, Northfork and Greenpoint .
2. Outreach campaigns in the target communities run by the faith-based institutions participating in the project. Specifically, one church in each community will take a leadership role - Allen AME in Queens and Bridge Street Church in Brooklyn - in alerting community members about the hotline.
3. Consumer seminars hosted by the participating banks to educate residents on the lending process.
4. A resource clearinghouse to link potential applicants with information on available lending products to consumers
5. A financial literacy handbook specifically for faith-based institutions developed by the Faith Center for Community Development and funded by a $50,000 Fannie Mae grant . The Faith Center will also conduct training courses in at the two leadership churches and make consumer materials available through these institutions.

Rev. Jackson, Rev. Floyd Flake, Gorelick, Rev. David Cousins of Bridge Street AME , and Michael P. Smith, President of the New York Bankers Association, joined Schumer at a news conference to announce the initiative.

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