Recent deregulation has caused a return of predatory products flooding the marketplace, including NINJA financing and auto, payday and PACE loans with exorbitant pricing. These products continue to be problematic for borrowers and prey on LMI and communities of color. We will explore how these products can continue to be prevalent 10 years after the financial crisis, and what housing professionals, advocates and individuals can do to intervene and eliminate these predatory practices.
Aracely Panameno, Director Latino Affairs, Center for Responsible Lending, Washington, DC
Randall Lowell, Executive Director, Greenfield Institute, Seattle, WA
Alys Cohen, Staff Attorney, National Consumer Law Center, Washington, DC
Matt Hull, Executive Director, Texas Associations of CDCs, Austin, TX
By: Michael Karlis
Not only does predatory lending still exists, it is a growing industry, according to Aracely Panameno, the director of Latino Affairs at the Center for Responsible Lending, while presenting at the Just Economy Conference in Washington on March 11.
Through her research, Panameno found that people aged 18-29 had a disproportionate amount of student debt and auto loan debt compared to their counterparts in the 30-39 age range and beyond. She said that the reason is due to the vast sums of student loan debt that the 18-29 age group takes on, which prevents them from buying cars and taking out a mortgage on a home, keeping this age group from building equity.
Panameno also found that 12.8 percent of those who were delinquent on a car payment were not aware of the higher interest rate that they were paying because they chose to finance through the dealership. In addition, 9.9 percent of those whose payments were delinquent were told that the dealerships’ interest rates were the “best rate available,” and dealerships told 18.3 percent that the add-ons such as warranties were “mandatory.”
Later that day, researchers from Brigham Young University, Utah State University and Rutgers University presented their research in “DENIED: The economic barriers faced by minority entrepreneurs.”
Their research found that black and Latinx entrepreneurs in search of a small business loan are treated differently than their white counterparts and that it is harder for minorities to obtain a small business loan. Although their latest research has not been made public yet, earlier work can be found here.