Agenda - 04-15-2008-3d - Laserfiche WebLink

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Orange County, North Carolina - AIFCH - 2007 little or no use. Moreover, these loans are often secured with the consumers' home. Fair housing organizations have received complaints from consumers who are about to lose their homes because they cannot afford the high cost loan they obtained. Most lenders do not provide quality counseling for consumers seeking their products and may use the consumer's ignorance as a ripe opportunity to reap huge profits. The most recent studies have indicated that the sub-prime mortgage market grew an average of 25% a year from 1994 to 2003, outpacing the rate of growth for prime mortgages. The industry accounted for about $330 billion or 9%, of U.S. mortgages in 2003, up from $35 billion a decade earlier. In the Orange County MSA, there were 268 lenders reporting HMDA data in 2004. Of those lenders, 63% (170) were sub prime lenders.13 While the information does not provide applications or market share for sub prime lenders in the MSA, it is obvious that sub prime lenders play a significant role in the lending market in the area. Determining the extent of predatory lending in the Orange County community is difficult because these lenders fall outside the Home Mortgage Disclosure Act's reporting requirements and are unregulated'. But Freddie Mac estimates that between 25-35% of consumers receiving high-cost loans in the sub-prime market qualified for conventional loans. It is estimated that approximately 25% of all sub-prime loans contain one or more terms that can be classified as predatory.14 6.2 Payday Loans, Title Loans Locations as Predatory As neighborhoods decline or change, local banks move out, replacing their services with ATM machines. As a result, check-cashing offices (called Alternative Financial Industries or AFS Businesses) begin to fill the need. They also are frequently located in areas with the highest minority population (Map 11). For a fee, these businesses cash payroll, government and personal checks for people who do not have access to or cannot afford to use banks because they are unable to maintain minimum balance requirements. Others have privacy concerns or do not want their funds accessible to creditors. A number of consumers use check-cashing outlets for the convenience. A recent AARP survey found that 19% of persons 50-64 years old had cashed a check at an AFS. The Center for Responsible Lending (CRL) reported in April of 2006 that: • Sixteen percent of overdraft loan users account for 71 % of fee-based overdraft loan fees. • Repeat users are more often low-income, single, nonwhite renters. 13