HR0824 94TH GENERAL ASSEMBLY

HR0824 LRB094 18478 MKM 54216 r

HOUSE RESOLUTION

WHEREAS, The Illinois House of Representatives recognizes that predatory lending is a serious problem that victimizes homeowners throughout our State through the provision of financing that they cannot afford and that, for many, results in default, foreclosure, and the loss of their home; the highest concentration of these victims is found among our most vulnerable citizens, especially the elderly; and

WHEREAS, The Illinois House of Representatives further recognizes that the practice of predatory lending serves to undermine the health and quality of life in local communities throughout Illinois because the growing volume of foreclosures caused by this unprincipled activity results in dense clusters of vacant and abandoned homes severely compromising the physical safety and home equity value of surrounding neighbors; and

WHEREAS, In 2003, the Illinois General Assembly enacted the High Risk Home Loan Act to provide additional protection from predatory lending to Illinois home loan borrowers by (i) establishing standards for lenders engaged in high risk lending, (ii) endowing high-risk loan borrowers with the right to pursue civil remedies against both the originator and secondary market holder of the loans, and (iii) allowing the Illinois Attorney General to pursue civil actions against unscrupulous lenders under the Consumer Fraud and Deceptive Business Practices Act; the High Risk Home Loan Act is recognized as one of the toughest state laws on predatory lending in the nation; and

WHEREAS, Illinois law is intended to target abusive lending practices and protect Illinois citizens with credit problems who have taken out loans with higher fees and interest rates than the fees and rates charged to people with better credit; and

WHEREAS, Lenders that make home loans to people with fragile credit are lobbying Congress for federal rules that could roll back the robust protections now available under Illinois law; and

WHEREAS, Lenders have rallied behind the Responsible Lending Act (H.R. 1295), legislation that would impose uniform national regulations on the industry and, by preempting state law, strip individual states of the ability to protect their citizens from predatory lending practices; and

WHEREAS, While lenders argue that a uniform system of federal regulation would allow them to better provide lending products to a segment of the population that is in dire need of specialized home ownership resources, the federal legislation they support is merely an attempt to eliminate barriers to predatory lending practices throughout the nation; in fact, the Responsible Lending Act would reduce the number of Illinois citizens protected under current law, override essential protections in Illinois law prohibiting equity stripping, roll back provisions of Illinois law that prohibit prepayment on loans with interest rates above 8%, and damage the rights and remedies of Illinois citizens with respect to foreclosure and the right to rescind an abusive home loan; and

WHEREAS, The more consumer-friendly Prohibit Predatory Lending Act (H.R. 1182) has also been introduced in Congress; that legislation would not strip the states of their ability to more stringently regulate predatory lenders and would provide for additional protections for vulnerable borrowers, such as a strict ban on pre-payment fees and on the home-equity stripping practice of "flipping", in which lenders encourage borrowers to refinance quickly, and a requirement for borrowers to get counseling before signing contracts for higher-cost loans; and

WHEREAS, Illinois citizens deserve the right to vigorous protection against abusive predatory lending practices; therefore, be it

RESOLVED, BY THE HOUSE OF REPRESENTATIVES OF THE NINETY-FOURTH GENERAL ASSEMBLY OF THE STATE OF ILLINOIS, that we urge Congress to defeat the Responsible Lending Act and all other proposals that would undermine Illinois predatory lending laws and the important protections they provide; and be it further

RESOLVED, That a copy of this resolution be presented to the President pro tempore of the U.S. Senate, the Speaker of the U.S. House of Representatives, and each member of the Illinois congressional delegation.