LWVMC Positions: Lending

Convenient Lending (adopted May 2007)

Support provisions to provide consumers accurate and complete information on the costs of loans (terms, interest, fees and penalties). Consumers would benefit if provided information about other financial options.

  • Support provisions for all lenders to implement a tracking system to enable shared information on monitoring of loans; preventing overuse of rollovers and concurrent loans. Lenders should be encouraged to assist in providing consumer education.
  • Support efforts of the municipalities in Milwaukee County to use the avenues available to regulate non-chartered lending businesses. The Milwaukee Task Force on Convenient Lending recommendations are reasonable standards.
  • Chartered financial institutions should be encouraged to maintain a presence in low to moderate income areas.
  • The most important elements of consumer protection must come from state and federal regulations in the form of limits on interest, term, rollovers, amount and number of concurrent loans.
(Note: "Chartered institutions" cover banks, savings & loans, and credit unions. Convenient lenders are not regulated or chartered.)

Predatory Mortgage Lending (adopted May 2008)

Support the following home mortgage provisions as fair to lender and borrower alike:
1. Verification of borrower income.
2. Full disclosure of the cost of the loan – monthly and lifetime.
3. Terms appropriate to the borrowers ability to make monthly payments.
4. Debt equal to or less than the home's current value
5. Clear limits on prepayment penalties.
6. Escrow fund for property taxes and insurance.
Support a legal ban on two industry practices – yield spread premiums and
pre-foreclosure conveyances. Support home ownership classes for first-time buyers to foster consumer responsibility. Support that all parties who profit from mortgages have a fiduciary duty to
consumers and should be held legally accountable. This includes the loan
originator, the originator's company/institution, funding sources, underwriters,
mortgage purchasers, rating agencies, trust officers, regulators and loan servicers. Support for clear industry standards, including competency test, certification and
continuing education requirements for all loan originators, mortgage brokers, independent
mortgage companies and banking affiliates. The mortgage industry requires governance.