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.And to the ex-tent that the required disclosures were in fact made by Acme (albeit in legalfine print not understandable to Mary), as with TILA, Acme would be ina position to argue that when Mary signed the documents, she was on no-tice of her obligations.Equally problematic, in order to seek relief fromAcme for abusive asset-based predatory lending practices, Mary wouldneed to show that Acme was engaged in a pattern or practice of abusiveconduct.Gathering this type of evidence is complicated and difficult.Marycertainly would not have the resources to hire an attorney with the ex-pertise to undertake this kind of investigation.In short, were Mary to relysolely on HOEPA to seek relief, she would face some very difficult proofissues.Real Estate Settlement Procedures Act (RESPA)The Real Estate Settlement Procedures Act (RESPA) ensures that bor-rowers obtain basic information about their loan during the transaction,prohibits certain practices that may increase settlement costs, and imposescertain requirements on loan servicing practices.26 RESPA applies to  fed-erally related mortgage loans secured with a mortgage on a one-to-four-family residential property, which includes most home purchase loans,assumptions, refinances, home improvement loans, and equity lines ofcredit.27RESPA requires that lenders detail the costs associated with settlement,outline lender servicing and escrow account practices, and disclose anybusiness relationships between settlement service providers.28 RESPA alsoprohibits certain potentially predatory practices that could increase settle-ment costs to the borrower.For example, RESPA makes it illegal to giveor accept any item of value for referrals of settlement services or to give oraccept charges for services not actually performed.29Finally, RESPA requires loan servicers to follow certain practices relatedto the servicing of the loan and any escrow account used for paying prop-erty taxes, insurance, and the like.Servicers must respond to the borrower swritten questions or complaints about servicing of the loan within 60 days,Legal Remedies for Predatory Lending 161and must provide the borrower advance written notice before servicing ofthe loan is transferred to a new servicer.30 Although RESPA does not re-quire lenders or servicers to maintain escrow accounts, where such an ac-count is maintained, RESPA places limits on the amount of money theservicer may require the borrower to pay into the account, and requiresthat the servicer make payments on time to avoid late charges.31As important as these protections may be, RESPA s reach is limited.Al-though some of its provisions create an explicit federal cause of action, thusallowing borrowers to file private suits, others (including some of the dis-closure provisions) do not.Furthermore, disclosures offer only partial pro-tection, for the simple reason that many borrowers do not understand thecontent of the notices they are given.In addition, settlement costs and serv-icing practices while they can be unfair and abusive are not the primarymethods by which predatory lenders strip equity from their victims.Thus,for a predatory loan victim like Mary, who is in need of a statute that willoffer her meaningful protection and relief, RESPA presents many of thesame practical shortcomings as TILA and HOEPA.Equal Credit Opportunity Act (ECOA) and Fair HousingAct (FHA)Predatory lenders are by no means even-handed in where they ply theirtrade and whom they choose to target with their fraudulent practices.Oftenthese lenders focus their exploitative practices on traditionally underservedpopulations where minorities, women, and the elderly are disproportion-ately represented.This practice, known as  reverse redlining  defined asmarketing bad loans to an area because it is home to members of a certainracial, ethnic, or other group protected under the law is a civil rights issue,because it causes significant harm to minority communities in particular.Like traditional redlining the practice of denying prime or good loansto a minority area or community reverse redlining has, in recent years,been held to violate both the Fair Housing Act (FHA) and the Equal CreditOpportunity Act (ECOA).32 Where these two laws can be used to combatpredatory lending practices, the effect may be considerable, in large partdue to the extraordinary range of remedies and procedural options thesestatutes offer.In the broadest sense, the FHA and ECOA prohibit discrimination in theextension of credit and real estate-related transactions (defined to includemortgage lending).Both statutes permit recovery of compensatory damages(that is, money to make a victim whole for the injury suffered), punitivedamages, and attorneys fees, in addition to  injunctive relief (a legal termfor nonfinancial steps that the court can order to right the wrong done orto prevent future harm).33 The FHA, in particular, provides a far more gen-erous statute of limitations than most other federal statutes,34 and grantsan automatic right to a jury trial.35 In addition, both the FHA and ECOA162 Why the Poor Pay Morepermit a finding of liability not just where discrimination is intentional, butalso where a lending practice has an unnecessary disparate impact (a dis-proportionately negative effect) on a protected group.Given the right factsand a receptive court, these are powerful tools far more effective thananything offered by TILA, HOEPA, or RESPA.For all that these statutes offer, however, they also pose problems forthose seeking to prosecute predatory lenders.First, the FHA and ECOAwere designed to provide a remedy for discriminatory conduct that is,conduct that treats protected groups differently from nonprotected groups.To prevail under these statutes, it is not enough to show that a lender sub-jected an individual to unfair or fraudulent practices; the victim must provethat she was subjected to the practices because of her race (or some otherprotected characteristic).That means, of course, that  equal opportunitypredatory lenders those who prey equally, for example, on white andAfrican American communities, young and old, men and women may falloutside the reach of these laws.Second, even where a lender has engaged in discrimination, it is not al-ways easy to prove, especially for an individual without significant timeand resources.For example, proof of discriminatory marketing usually re-quires evidence of how a lender treats a larger group of borrowers withina metropolitan community.An individual victim facing foreclosure maywell lack the time or resources to marshal this kind of evidence or other-wise build a winning FHA or ECOA case.Mary offers precisely such an example.Her individual experience withAcme would not, in and of itself, provide sufficient evidence to support aracial targeting claim under the FHA or ECOA.Mary would need to mar-shal evidence of how others in her minority community were treated, andexamine whether Acme markets its predatory practices in similarly situatedwhite neighborhoods [ Pobierz całość w formacie PDF ]