NEWS RELEASE

Consumers United Association
Urges Consumers to Unite Against Predatory Lending

Denver, CO - February 8, 2002 - Consumers United Association (CUA), a member of the Fair Lending Coalition, has joined other Colorado organizations in an effort to stop predatory lending. Predatory lending is defined as deceptive and inappropriate mortgage loan structures and terms that are marketed to low-income, minority, elderly populations and others who have credit problems or circumstances which have prevented them from obtaining mainstream loans.

Many Colorado consumers are not familiar with the mortgage loan process and are prime targets for predatory lenders. Predatory lending practices cost Colorado homeowners more than $90 million in 2000 reports Association for Community Organizations for Reform Now. To protect consumers from these lenders, legislation is being introduced to stop the often-abusive practices of predatory lenders.

CUA urges consumers to support Senate Bill 02-073 that would protect consumers against exorbitant hidden costs and fees, prepayment penalties and balloon payments, financing of credit insurance and loans that they don't have the ability to repay and more.

"CUA supports full access to competitively priced credit including sub-prime lending. We are working to prevent the sub-prime, predatory lending that harms consumers," explains Renee Rupe, executive director, CUA. "True sub-prime lending will not be affected by the pending anti-predatory lending legislation. Instead, targeted consumers will be protected from the practices of predatory lenders," continues Rupe.

CUA offers the following suggestions to consumers to help avoid predatory lending practices:

• Do your homework. Before you make an appointment with a lender, be aware of the current average interest rate for mortgage loans.
  
• Also, send off for a copy of your credit report and make sure there is no incorrect, negative information included in the report. You may want to consider attending a homebuyer workshop if you are not familiar with the mortgage loan process or seeking credit counseling if your credit rating is bad.
• Shop around for a competitive interest rate. If you do not feel you are being offered the lowest interest rate for your credit situation, make an appointment with a different lender. This is particularly important if you are refinancing a loan.
• Watch for hidden costs. Prepayment penalties, balloon payments, financed credit insurance, broker fees and other fees are all signs that your loan may be a predatory loan. While many good loans include these same fees, a sub-prime loan with these fees may make it difficult for you to re-finance with a better lender in the future.
• Insist on loan paperwork written in your native language. If you are not fluent in English and have been counseled about a mortgage loan in your native language at a lender's office, loan paperwork should be furnished to you written in the language in which you were counseled. If the lender will not comply with your request, seek a loan from a different lender.
• Understand all terms and fees before signing. Do not sign anything if all of your questions have not been answered fully. Any points or fees included in your loan should be explained in detail to your satisfaction. Be certain you know exactly what is included in the total amount of your loan.

Consumers United Association (CUA) is a nonprofit consumer advocacy association serving consumers in Colorado. Our mission is to improve the financial lives of consumers by providing financial education and advocacy. CUA offers services and resources to aid consumers in the resolution of consumer problems and provides a united voice for consumers in the legislative arena. For more information visit www.cuacolorado.org.