City of Philadelphia - File #: 000479

• File #: 000479
• Version: 0
• Type: Resolution
• Status: LAPSED
• File created: 6/15/2000
• In control: Committee on Finance
• Title: Authorizing a full and comprehensive investigation by Council's Committee on Finance of the lending practices of subprime lenders in the City of Philadelphia to determine the extent and impact of predatory lending practices on the City's homeowners, and the remedies that can be developed against such practices by the Council.
• Sponsors: Councilmember Tasco, Councilmember Mariano, Councilmember Ortiz, Councilmember Goode, Councilmember Reynolds Brown, Councilmember Blackwell, Councilmember DiCicco, Councilmember Miller, Councilmember Nutter, Councilmember O'Neill, Councilmember Krajewski, Councilmember Kenney, Councilmember Rizzo, Councilmember Cohen

Date	Ver.	Action By	Action	Result	Tally
6/15/2000	0	CITY COUNCIL	Referred
6/15/2000	0	CITY COUNCIL	Introduced	Pass

Title
Authorizing a full and comprehensive investigation by Council's Committee on Finance of the lending practices of subprime lenders in the City of Philadelphia to determine the extent and impact of predatory lending practices on the City's homeowners, and the remedies that can be developed against such practices by the Council.
Body
WHEREAS, A study of lending practices in Philadelphia authored by the Pennsylvania Association of Community Organizations for Reform Now (ACORN) made the following findings relating to one neighborhood in the City.

• While all lending increased 400% from 1992 to 1998, conventional lending increased only 61% compared to a subprime lending creasing of 4800%.
• Subprime loans grew from only 5.3% of all loans originated in 1992 to 63% of all loans originated in 1998.
• Foreclosures have increased 93% since 1990. Of the foreclosures for which it was possible to identify the original lender, 79% were non-bank lenders; and

WHEREAS, Studies conducted by ACORN and others throughout the nation have documented that many subprime lenders routinely engage in predatory lending practices, such as:

• imposing severe prepayment penalties on loans to lock homeowners into oppressively high interest rates;
• structuring adjustable interest rates so the payments adjust only upward and never fall;
• requiring a balloon payment whereby a borrower must pay off virtually the entire loan amount despite making periodic payments for 15 years;
• flipping homeowners who are currently struggling with mounting debt into home loans in which monthly payments may be lower but the total mount of principal and interest exceeds the previous loans many fold; and

WHEREAS, There are currently no legal prohibitions against making or arranging such predatory loans; and

WHEREAS, Further investigation must take place to determine the extent and nature of subprime and predatory lending practices throughout the City; and

WHEREAS, If it i...