New York's Senator
CHARLES E. SCHUMER

FOR IMMEDIATE RELEASE July 19, 2001

NEW HOTLINE TO COMBAT PREDATORY LENDING TO TAKE EFFECT ON JULY 20

Hotline - 1-888-297-7179 - Kicks Off New Program To Help New Yorkers in Minority Communities Obtain Home Mortgage Loans From Conventional Lenders

US Senator Charles E. Schumer today announced that a new hotline - 1-888-297-7179 - to combat predatory lending and help New Yorkers in minority communities obtain access to home mortgage loans from conventional lenders will become operational on Friday, July 20. The hotline is the centerpiece of a new program aimed at reducing predatory lending in New York City. Operated by the New York Bankers Association, the hotline will put residents of Central Brooklyn and Southeast Queens in touch with nine banks participating in the pilot program. The banks will then offer consumers the lowest-cost mortgages for which they qualify, as well as referrals to an active network of credit and housing counseling agencies.

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. "This hotline will not only create more homeowners, it will also keep unethical lenders from preying on unsuspecting New Yorkers."
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, in addition to the hotline, will feature the following:

1. 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.
2. Consumer seminars hosted by the participating banks to educate residents on the lending process.
3. A resource clearinghouse to link potential applicants with information on available lending products to consumers
4. 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.

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