DeStefano Proposes Plan for Equal Opportunity for Homeownership

June 15, 2006

DeStefano's plan to tackle discriminatory lending practices.

New Haven - John DeStefano is announcing today - June 15 - an aggressive proposal to end discriminatory and predatory lending practices and help all Connecticut residents have an equal opportunity for home ownership. Despite similar credit ratings, African-American and Hispanic homebuyers pay higher interest rates than whites on sub-prime mortgages and a recent report indicates Connecticut has one of the weakest laws on the books to prevent predatory mortgage lending.

DeStefano pledges that as Governor he will push for more stringent legislation to protect all residents from discriminatory practices. "These abusive practices, if left uncurbed in Connecticut, will continue to eat away at the ability of working class families to build wealth and realize the American dream of homeownership," said DeStefano.

According to the Department of Housing and Urban Development, minority and low income families lose an estimated $16 billion each year because of predatory lending practices. In a ranking of 331 metropolitan service areas (MSA) by the Center for Community Change, Connecticut's urban centers were ranked in the top half of the worst cities in sub-prime lending. Incredibly, in some cities, upper income minorities are denied more often than lower income whites.

John DeStefano believes Connecticut cannot simply continue the Rowland/Rell legacy of neglect when it comes to helping all families from being squeezed financially; especially when the squeeze is compounded by discriminatory practices. As governor, John DeStefano will call for immediate action in the passage of stronger anti-predatory lending legislation - including 8 proposals based on North Carolina predatory lending laws:

- No repayment penalties for home loans of $150,000 or less.

- No "flipping", where a lender repeatedly refinances an existing home loan with upfront fees.

- No financing of upfront, single premium insurance. Monthly payment insurance is still permitted.

Restrict the terms of high cost home loans:

- No financing of upfront fees and insurance premiums.

- Require counseling for high cost home loan borrowers prior to loan closing.

- No balloon payments, where the borrower owes a large lump sum at some point during the loan.

- No loans with negative amortization, where the loan amount increases because the monthly payments do not cover the loan costs.

- No lending without consideration of consumer's ability to repay.

"It's incredible that in the year 2006 such discriminatory practices still exist," said DeStefano. "Every family should have a fair shot at home ownership. Ending discrimination that hurts working families is an example of something government can and should do, and as governor I will get it done."