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Predatory Lending: Are Federal Agencies Protecting Older Americans from Financial Heartbreak?

However, AARP continues to work with consumer advocates, policymakers, credit rating agencies, and major purchasers of mortgage loans to provide foreclosure protections for older borrowers victimized by predatory lenders. It must be noted that, even with the previously noted protections for high-cost loans, unless there is some deterrent to the purchase or assignment of possible predatory loans by the secondary market, predatory lenders will continue to receive capital, and will continue to make unaffordable loans.

In addition, AARP continues to be extremely concerned about the recent actions regarding state preemption by the OCC and Office of Thrift Supervision (OTS) and their impact upon older borrowers. Neither of these agencies has adopted strong regulations that protect borrowers from predatory practices. In addition, enforcement limitations are likely to mean that, in reality, victimized older borrowers will not be able to avoid a foreclosure that was caused by predatory lending practices.

AARP's efforts have also included an educational campaign, titled "They didn't tell me I could lose my home." Educational materials, tips on shopping for mortgages, and media messages are among the resources offered to educate homeowners about predatory mortgage lending. AARP has sponsored local "consumer universities" that include workshops on avoiding predatory lending, as well as statewide "Predatory Lending Sabbath" days in several states. Finally, AARP has partnered with legal services providers to train attorneys who work with victimized homeowners about the legal issues surrounding predatory loans.

In summary, homeownership is the great American dream – a commitment to personal financial security and to economic growth, creating economic prosperity for families and communities. According to one recent study, 83 percent of Americans believe that owning a home is a good investment. For older households, home equity is a key component of wealth among older households.

Assuring that older mortgage refinance borrowers obtain appropriate loans is critical to ensuring the current and future financial security of millions of older Americans. Predatory lending harms both homeowners and legitimate lenders. AARP looks forward to working with you, Chairman Craig, and with the other Members of this Committee, to find effective and appropriate methods for eliminating egregious lending practices that prove devastating to older persons and their families.

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