Gramm stresses need to define "predatory lending": Report reinforces NAMB positions on key issuesmortgagepress.compredatory lending, analysis, data,
After working closely with NAMB and other key trade groups,
Senator Phil Gramm, Chairman of the State Committee on Banking,
Housing, and Urban Affairs, released a committee staff analysis of
responses from nine federal regulatory agencies to inquiries about
the definition of "predatory lending," and the data each agency has
collected about predatory lending.
Released on August 25, the staff report finds that:
•The regulators do not have and did not provide a
definition of "predatory lending."
•The regulators do not have systematic or organized data on
predatory lending, and collected data is anecdotal at best.
•The regulators are still in the early stages of gathering
•The regulators blur the distinction between sub-prime
lending and predatory lending.
•The regulators do not report any lack of existing legal
authority to penalize those abuses that they identify.
"As the regulators themselves admit, there is not definition of
predatory lending," Senator Gramm said. "I don't know how we can
hope to address the problem before we have decided what it is. This
is the first step, and we cannot skip it."
"If we act hastily to stop predatory lending without knowing
what it is, we could end up cutting off legitimate loan sources and
ending the home ownership dreams of millions of Americans. I, for
one, am not willing to take that risk."
"The letters from the regulators recognize that a practice that
can be abusive in some contexts can also, in absence of fraud or
deception, be highly beneficial to consumers. Well-meaning but
haphazard reactions on the part of the regulators or Congress may
have the unintended consequence of hurting those whom we intend to
"The regulators and the courts already have a number of tools to
combat the illegal and abusive practices that have been labeled
'predatory' in the anecdotal information. To date, any failures
have been failures to apply existing laws rather than any
demonstration of inadequacy in the laws themselves."
The committee report is a major step forward on the issue of
predatory lending. As the report was in development, NAMB members
and staff had extensive meetings with the Senate Banking Committee
to make recommendations on the report and its contents. The
conclusions in the report closely mirror the Congressional
testimony of NAMB President Neill Fendly, and build on the work
done by NAMB's federal negotiating team led by Mr. Fendly and
joined by Legislative Chairman Jim Nabors, NAMB Counsel Robert
Lotstein, and Director of Governmental and Public Affairs Channing
To read the full text of the staff report, visit