The noose is slowly tightening around the necks of predatory lenders who charge exorbitant fees and rates on mortgages, home improvement loans and home equity loans.

At the federal level, Rep. John LaFalce (NY), the highest ranking Democrat on the House Banking Committee, is crafting legislation to expand the 1994 law that requires additional disclosures on high-cost loans.

In addition, the Federal Deposit Insurance Corp. is working to keep predatory lenders out of the mainstream banking system, and Freddie Mac is advising consumer organizations and industry groups it will no longer purchase loans that are subject to the Home Owners and Equity Protection Act.

At the state level, meanwhile, three more states have introduced predatory lender legislation of their own, prompting Robert Lotstein, counsel to the National Association of Mortgage Brokers, to say, "The flood gates have opened to state regulation of high-cost home loans."

Patterning his legislation after a new law in North Carolina and a similar measurev working its way through the New York legislature, Rep. LaFalce wants HOEPA to cover a wider span of loans and outlaw an expanded list of abuses. Currently, the law requires additional disclosures on loans with high fees and rates. It also prohibits balloon payments and negative amortization, and restricts prepayment penalties.

The New York solan already has introduced a measure to prohibit creditors from soliciting business by sending live loan checks to consumers unless the customer has previously requested such credit.

At the state level, Illinois, Missouri and South Carolina are now considering HOEPA-like legislation.

Bills under consideration borrow heavily from the North Carolina law, according to a synopsis of the measures by attorney Lotstein. But the one in Illinois "goes further" by prohibiting prepayment penalties on any type of home loan and requiring that an attorney representing the borrower be present at the closing of a high-cost loan. And the bill in Missouri expands HOEPA's tests regarding the loan rate, points and fees.

Back in Washington, meanwhile, FDIC Chair Donna Tanoue said in a recent speech that institutions the agency supervisors should be careful not to purchase loans from or provide lines of credit to lenders who pray on unknowing consumers, especially the uneducated and the elderly.

To help them, Tanoue plans to work closely with the Federal Trade Commission to identify predatory lenders and warn legitimate financial institutions to keep them at arm's length. Also See:

Published: February 28, 2000

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When Lew Sichelman first started writing about housing in 1969, he was the youngest real estate writer in the country. Now, 37 years later, he's one of the oldest -- and most decorated. He has been rated the top housing columnist in the country by the National Association of Realtors as well as by his peers in the National Association of Real Estate Editors. Indeed, NAREE has recognized his work on numerous occasions. One year - due to his advancing age, he can't recall which one - he earned top honors in the annual NAREE Journalism Contest in three out of the four major writing categories. It was the first time one writer has won so many NAREE awards in a single year. Known for his ability to make even the most difficult topics understandable, Sichelman also has been honored by the National Association of Home Builders and the Mortgage Bankers Association. He began providing in-depth coverage of and consumer-oriented information about housing and housing finance at the Washington Daily News, where he was real estate editor. He held that same position for nine more years at the Washington Star, which purchased the News in 1972. The Star, a so-called "writer's newspaper" which also had the misfortune of being an evening paper, was put out of its misery in 1981, and Sichelman, who had begun self-syndicating his column in 1978, decided to become a full-time columnist. Today, his column, "The Housing Scene," is distributed by United Media to newspapers throughout the country. He also is on the staff of National Mortgage News, an independent newspaper which is considered the bible of the mortgage business. And he writes for numerous other publications, including MarketWatch.com, where he answers readers questions once a week, Sports Illustrated (don't ask), RealtyTimes.com, BigBuilder and others. Sichelman is married, the father of five and grandfather of eleven.