Minnesota: Attorney General

Candidates

Mike Hatch, Democrat
Tom Kelly, Republican
Dale Nathan, Independent

Issues: Predatory Mortgage Lending | Identity Theft | Electric Utility Deregulation |

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Question

Will you support or oppose a comprehensive Minnesota law to fight predatory mortgage lending?

AARP Response

Predatory mortgage lending consists of abusive, unfair, or deceptive practices that take advantage of persons. Some common practices are: deceptive marketing tactics, making loans without regard to a borrower’s ability to repay the loan; failing to disclose terms such as balloon payments; and repeatedly refinancing loans and charging excessive fees each time. Predatory lenders target older homeowners because they often have substantial equity in their homes. AARP believes legislation should be enacted to limit or prohibit predatory lending practices to protect consumers from facing foreclosure, as a result of a high cost predatory loan.

AARP has a model state statute, the Home Loan Protection Act that was developed to protect borrowers from abusive lending practices. The Model Act would restrict the financing of fees and charges, limit, prepayment penalties, and prohibit repeated refinancing of loans.

Issue	Yes	No	Unclear
Supports basing loan on borrower’s ability to repay.
Opposes prepayment penalties.
Supports restricting the financing of points and fees.

Candidate Response: Mike Hatch

I have consistently supported legislation to curb predatory lending and strengthen consumer rights in mortgage lending. In 1999, this office drafted the Homeowners’ Bill of Rights Bill and while much of the bill failed to pass the legislature, we were successful in getting a consumer protection bill enacted that enables the cancellation of private mortgage insurance. The Minnesota Attorney General’s Office suit against First Alliance Mortgage Company was a significant predatory lending case, and Minnesota consumers defrauded by the company received the most generous settlement available to consumers nationally. I supported the Responsible Lending Bill in 2002 and will continue to advocate for laws that stop equity stripping and unfair prepayment penalties.

Candidate Response: Tom Kelly

I support understandable disclosure of the terms of all loans. I support laws that prohibit predatory practices by lenders in the mortgage industry, including “loan flipping” practices in which fees are repeatedly refinanced into new loans secured by the same property. Existing laws and new market practices have already addressed some predatory practices, such as the financing of pre-paid insurance products. I do not, however, support legislation that will have the effect of preventing borrowers with damaged credit histories from obtaining mortgage loans. I believe seniors, like all Minnesotans, are fully capable of making decisions about their lives and property, and that the purpose of laws in this area is to prevent abuses, not limit choices.

Candidate Response: Dale Nathan

I oppose predatory mortgage lending. The problems and my remedies: Predatory loans. Mortgage loans should become uncollectible when the ability to repay was questionable. Legislation should protect low income homeowners, and provide assistance in locating suitable financing.

One-sided contract terms. Example: the homeowner pays the bank’s attorneys even if the bank is wrong. Remedy: provisions that work both ways.

Homeowner defense. Unaffordable legal expense often prevents homeowners from defending themselves. Remedy: publicly provided binding arbitration of mortgage loan disputes.

Excessive financing costs/fees. Banks should lose the right to repayment if the financing costs/fees were excessive. Prepaid penalties should be illegal.

Non-responsiveness. Banks often don’t listen. Callers get mechanical voices. Responsible answers by a human within a reasonable time should be required.

Question

What initiatives would you recommend to strengthen protections against identity theft and to provide assistance to victims in restoring their credit?

AARP Response

Identity theft is a descriptive term for a variety of crimes that occur when someone uses personal identifying information about an individual — such as a Social Security number to represent himself or herself as that person for fraudulent purposes. While victims are not liable for all bills accumulated by imposters, the impact on their financial health and credit history can be devastating. Further, victims are often forced to spend considerable time and money to resolve their cases and restore their credit. AARP believes that legislative and regulatory proposals should be developed to make it more difficult for unauthorized persons to obtain access to personal identifying information and to assist the victims of identity theft in both investigating the crime and repairing their damaged credit.

Issue	Yes	No	Unclear
Offers plans to fight identity theft
Supports increased assistance for investigating crimes for victims
Offers plans to help victims repair their damaged credit

Candidate Response: Mike Hatch

Identity theft can be a crippling crime. The Attorney General’s Office has worked aggressively to expose and abolish the misuse of personal financial information that underlies many identity theft crimes. We have filed consumer protection lawsuits relating to the privacy of financial data against U.S. Bancorp, Fleet Mortgage Corporation and others, which have helped to establish and improve national standards in maintaining the privacy of consumer financial data. We have also drafted legislation to comprehensively address the misuse of personal data by banks, health providers, telephone companies and internet service providers. While the House of Representatives has refused to enact these bills, we will continue to advocate for them.

Candidate Response: Tom Kelly

As Attorney General, deterring and punishing identity theft and other threats to individual security arising from the internet and information technology will be one of my priorities. The Minnesota Attorney General’s office should promote the use of information technology to catch criminals who use that technology offer assistance to County Attorneys in investigating and prosecuting identity theft and other technological crimes, support initiatives to help people whose credit is damaged as a result of identity theft or internet fraud, and provide public education that helps protect people against crime and fraud on the internet without restricting the benefits of the information revolution. My background in the private sector gives me the perspective necessary to design and support effective actions in this area.

Candidate Response: Dale Nathan

All sellers of goods and/or services, including those that solicit sales through the internet or by telephone, should be licensed, registered, and, where appropriate, bonded. Identity theft should be a felony. Victims of identity theft should have the right to have credit standing restored in a court action paid for by the identity thief. The Attorney General should greatly increase his efforts to educate the public, especially seniors, on ways of protecting against identity theft, including seminars, visits to senior homes, mailings, and other education programs, and should encourage other community organizations to provide such education.

Question

Will you support or oppose electric utility deregulation or restructuring?

AARP Response

Minnesotans electric rates are below the national average. While advocates for electric utility deregulation suggest that providing customers with a choice of electric providers will lower rates with increased competition, some states, such as California, have seen huge rate increases. A bill was introduced in the 2001 legislature to deregulate Minnesota’s electric utility industry. AARP believes that the current regulated electric industry provides Minnesotans with affordable, reliable and safe electric service. AARP believes that consumer protections are an important part of Minnesota’s current regulated system, and AARP believes that future energy needs can be met with new power generation that is economically feasible, reliable, ecologically sound and promotes the use of alternative sources of energy.

Issue	Yes	No	Unclear
Opposes electric utility deregulation or restructuring.
Supports strong consumer protections.
Proposes plans for Minnesota’s future energy needs.

Candidate Response: Mike Hatch

I am strongly opposed to electric utility deregulation or restructuring. In 2000 this office issued a white paper expressing strong opposition to energy deregulation. The paper noted there was no empirical evidence that a deregulated or restructured market would contribute positively to a reliable or affordable power system. As it turns out, the experience of deregulation in states like California and New York has resulted in a host of problems including the doubling of consumer prices for electricity; emergency power interruptions, such as blackouts and brownouts; unregulated prices charged by a handful of firms that control the market; the transfer of state and local regulatory authority to private boards; and fraudulent business practices by unregulated utilities, including the inability to provide low cost electricity promised to new customers.

Candidate Response: Tom Kelly

The electric utility industry needs to be regulated, to prevent unfair pricing and ensure a reliable supply of electricity for consumers. But regulation should not stifle innovation. To meet the increasing needs of the state over the next two decades will require a mix of new power plants, alternative energy sources (e.g., wind power), conservation, and additional transmission capacity to permit power to be shared across a national market. These needs can be met at lower cost to consumers if we properly restructure the electric utility industry. If we fail to properly restructure the electric utility industry, we may find ourselves vulnerable to unfair market manipulation and higher prices, as happened in California.

Candidate Response: Dale Nathan

I will carefully consider proposals to deregulate or restructure electric utilities and support proposals, if any, that increase competition among suppliers of electric power and provide the best value for consumers. For example, there are proposals to greatly increase the production of wind-generated electricity with both cost savings and benefits to the environment. I strongly support thoughtful consideration of these proposals and potential restructuring that may be associated with them. I strongly support consumer protection not only with respect to electric utilities, but with respect to all consumer transactions. As protection against a family or individual losing the ability to purchase the electric power they need, I favor initiatives for livable wages and affordable housing.