A recent statement from the U.S. General Accounting Office (GAO) assesses the extent of predatory lending in the U.S. and discusses various preventive and regulatory measures designed to address the problem.
The statement is based on a GAO study of federal and state efforts to combat predatory lending practices. The GAO, acknowledging that there is no universally accepted definition of predatory lending, applies the term to “a range of practices, including deception, fraud, or manipulation, that a mortgage broker or lender may use to make a loan with terms that are disadvantageous to the borrower.”
Among the study findings, the GAO reports that federal banking regulators see little evidence of predatory lending by the institutions they supervise, but the practices of nonbank mortgage lending companies that are owned by financial or bank holding companies may be a matter of concern. In addition, the study indicates that consumer education and counseling efforts are useful in reducing predatory lending, but a variety of factors may limit their effectiveness.
To access the full statement, visit www.gao.gov/new.items/d04412t.pdf.
