Freddie Mac Makes Move to Reduce Predatory Lending
Feature Story by Ritu Kelotra - 12/9/2003
Civil rights, consumer, and lending groups today applauded federal home loan corporation Freddie Mac's recent decision to ban mandatory arbitration clauses from all subprime loans it purchases, saying that the decision will help protect homeowners from predatory lending. Subprime lending has created a valuable new source of capital for credit-strapped borrowers, allowing them to become homeowners.The groups, including AARP, the Leadership Conference on Civil Rights (LCCR), Consumer Federation of America, ACORN, National Community Reinvestment Coalition, and the NAACP, among others, said they are confident that Freddie Mac's recent decision will protect many Americans from unknowingly signing loan contracts that might eventually deny them access to justice if disputes arise. The groups also expressed hope that others in the industry will follow suit.
"Today, predatory lending and the practices that support it are one of the greatest threats to families working to achieve financial security," said Wade Henderson, executive director of LCCR. "Making the marketplace work for everyone – with fair standards and effective safeguards – must be an important part of our generation's social legacy."
