Neighborhood Renewal Services of Saginaw, Michigan, helped organize two anti–predatory lending sessions sponsored by the Saginaw Community Reinvestment Act Bankers Forum. The purpose was to educate residential mortgage industry professionals and the general public on the issue of predatory lending.

Neighborhood Renewal Services of Saginaw, Michigan, was established in 1988 to combat community deterioration and provide opportunities for affordable housing. It provides neighborhood marketing projects, financing for home purchase and rehabilitation, leadership training for neighborhood residents, and homebuyer counseling and education. NRS is a HUD-approved housing counseling agency. It owns and manages 16 rental housing units, three commercial warehouses, and a neighborhood youth center.
 
NRS has partnered with St. Mary’s Hospital, the city of Saginaw, the Saginaw County Chamber of Commerce and the business community to eliminate blighted properties, and to assemble land and redevelop the Cathedral District and its South Washington corridor.
 
The Saginaw Community Reinvestment Act (CRA) Bankers Forum is a newly created consortium of area financial institutions committed to addressing educational and financial needs related to affordable housing and community improvement. Participating members include seven local banks, NRS and Saginaw Habitat for Humanity.

Defining Predatory Lending.  As defined by the Saginaw CRA Bankers Forum, predatory lending is a process of unfair or unethical lending and credit practices. Predatory loans strip the equity from homeowners by charging high fees or interest rates to borrowers. When borrowers fail to keep up with their payments, the result can be foreclosure, and borrowers can lose the wealth they have worked to accumulate. Common victims of predatory lenders are senior citizens and minorities.

Mortgage Industry Lunch.  The first anti–predatory lending session was geared to professionals in the residential mortgage industry. The Michigan attorney general was the keynote speaker. She described predatory-lending methods, stressing that predatory lending is a fast-growing issue in Michigan communities, and identified its effects on the banking industry. Industry professionals were prompted to act responsibly and help consumers make the better choices to overcome credit issues. The session also covered the legislation needed to prevent predatory lending. Tickets to the luncheon were $15.

Public Forum.  The second session was geared to consumers. It also was led by the Michigan attorney general. Panelists represented the Federal Reserve Bank of Chicago, Michigan Department of Civil Rights, the Consumer Protection Division of the Michigan Attorney General’s Office, and Legal Services of Eastern Michigan. The session defined predatory lending and the risks to potential borrowers. It discussed how to avoid predatory lenders and loans, how to determine if you are a victim, and whom to call for assistance and advice. Victims of predatory lending talked about their experiences; panel members suggested remedies. The forum was free for all participants.

Role of NRS.  NRS is part of a public-education committee (a subgroup of the CRA Bankers Forum) and was heavily involved in planning and facilitating both sessions. It sent out mailings and invitations, staffed the event and conducted outreach to the media. Participating lenders were also very involved, but NRS was the main organizer.

Materials for Participants.  Participants at the public forum received a consumer information pamphlet giving background information on predatory lending, providing a list of helpful questions when shopping for a loan, and listing a phone number to call for help.

Media Coverage.  Pre-event media coverage included news releases, public-service announcements, notices on the local cable channel, a story in the local newspaper, and two interviews with NRS’s executive director on local radio stations. The day of the event, three television stations reported on it, and the local newspaper ran a story. Most media coverage gave detailed information on the issue of predatory lending.
 
Other marketing strategies included direct invitation mailings to banks, title companies, appraisers, mortgage brokers, real estate agents and local nonprofit organizations.

• One hundred six professionals attended the mortgage industry luncheon and 160 people attended the public forum. From an educational perspective, the program was very successful because it helped raise consciousness in the community on predatory lending.
   
• NRS received very positive feedback on both sessions. Participants felt they were helpful and worthwhile. In addition, NRS experienced an increase in phone calls (both before and immediately afterward) from potential victims who had concerns about their loans.

When holding this type of educational forum, ask banking partners to use their connections to recruit qualified people for the panel. It also helps if all partners participate in garnering media coverage. Good coverage increases the program’s success.
 
NRS realized afterward that the public forum should have been longer. Many attendees had questions, and more time was needed to answer them.
 
From concerns voiced at the event, NRS realized it needs to identify additional anti–predatory lending services for consumers, and to know where to direct victims for further help and guidance. Issues associated with predatory lending require more attention than that currently provided by regulators. Remedying a predatory loan typically involves serious legal work. Organizations need to know what to do for victimized borrowers. Most likely, an attorney will need to be involved who is familiar with predatory-lending issues and litigating such cases.
 
An organization involved in combating predatory lending must have a person on staff who can judge if a borrower is actually involved in a predatory loan. Sometimes consumers simply make poor financial decisions in obtaining an expensive, but legal, loan. A counseling organization must be able to look at a customer’s loan documents, determine if the loan is predatory, and then recommend appropriate action.

Agency interview with: Mark Neumeier