Los Angeles Housing Department

ANTI-PREDATORY LENDING
The "Don't Borrow Trouble" Campaign

Information is also available in Spanish

In 2001, LAHD launched the Los Angeles "Don't Borrow Trouble" Campaign to educate homeowners about the dangers of predatory lending. LAHD coordinated program development with the assistance of the Federal Home Loan Mortgage Corporation (Freddie Mac), other City departments, consumer advocates, public interest law firms, fair housing groups and others involved with anti-predatory lending activities. The links at the end of this web page include those organizations.

What is predatory lending?

Predatory lending includes home loan scams where a lender or contractor uses deception or fraud to take unfair advantage of a borrower's lack of understanding about loan terms, combined with excessive fees and very high interest rates, without regard to the borrower's ability to repay the loan.

Signs of predatory loans

• Home loan offers over the phone, in the mail or in-person at your front door
• A contractor who says he can arrange financing for your home repair
• Pressure to sign loan documents immediately
• Pressure to sign loan documents with blanks in them
• You are not told the interest rate and the fees are not explained
• Interest rates that are far above current market rates
• Fees charged up-front without lowering the interest rate
• Costs and fees above normal
• Repayment schedules set up so that the monthly payment fails to pay off accrued interest and actually increases the original amount you borrowed
• Balloon payments--balance due on the mortgage must be paid at the end of the loan, usually 15 years. The balloon payment will be a huge sum of money, probably beyond your ability to pay. This may force you to borrow more money to pay back the loan
• Loans more than 100% "loan-to-value" may lock you into additional debt
• Credit life or credit accident and health insurance included as a condition of the loan. It increases the amount you owe.
• Loan contracts requiring mandatory, binding arbitration instead of the court system--lenders feel this forum will be more favorable to them and less favorable to the consumer
• Calls and letters asking you to refinance when you already did so in the last year or two

Make sure you understand the terms and conditions of any loan.
Don't Borrow Trouble. Get free advice first. Call 1-800-477-5977

Anti-Predatory Lending Ordinance for Los Angeles

Mayor James K. Hahn signed the Los Angeles Anti-Predatory Loan Ordinance on December 18, 2002. Before the ordinance could become effective, rules and regulations had to be approved and published. A lawsuit filed by the American Financial Services Association (AFSA) held up the implementation of the ordinance. AFSA also filed a lawsuit against a similar ordinance passed in Oakland, California in 2001.

The California Supreme Court ruled on January 31, 2005, that state law pre-empted Oakland's anti-predatory lending ordinance. The ruling applies to other cities, thereby blocking Los Angeles from implementing its ordinance and preventing other cities from adopting similar laws. Both the Oakland and Los Angeles ordinances, adopted in 2001 and 2002 respectively, provided greater protections against predatory loans than state law and would have required sub-prime home loan applicants to get counseling before signing loan documents.

The documents below include the Los Angeles ordinance, the City Attorney's report on the ordinance and the findings that support the ordinance.

Los Angeles Anti-Predatory Lending Ordinance, 11/21/02 (.pdf)
Corrections: Chapter XVIII, Section 181.00

List of Appendices (.pdf)	Appendix 7 (.pdf)	Appendix 16 (.pdf)
Appendix 1 (.pdf)	Appendix 8 (.pdf)	Appendix 17 (.pdf)
Appendix 2A (.pdf)	Appendix 9 (.pdf)	Appendix 18 (.pdf)
Appendix 2B (.pdf)	Appendix 10 (.pdf)	Appendix 19 (.pdf)
Appendix 2C (.pdf)	Appendix 11 (.pdf)	Appendix 20 (.pdf)
Appendix 3 (.pdf)	Appendix 12 (.pdf)	Appendix 21 (.pdf)
Appendix 4 (.pdf)	Appendix 13 (.pdf)	Appendix 22 (.pdf)
Appendix 5 (.pdf)	Appendix 14 (.pdf)	Appendix 23 (.pdf)
Appendix 6 (.pdf)	Appendix 15 (.pdf)

City Attorney's Report on the Anti-Predatory Lending Ordinance, 11/21/02 (.pdf)

Report-Back to Housing & Community Development Committee on Findings from Public Hearings on Predatory Lending, 11/6/02 (.pdf)

Los Angeles Promotional Materials

Please feel free to print out and post these at your workplace, houses of worship, local businesses and other places where the public can learn about this growing problem.

LA Flyer 1 (.pdf)
LA Flyer 2 (.jpg)
Poster - needlepoint (.pdf)
Poster - doormat (.pdf)
Promotional give-away items

Educational Materials

Avoiding Home Equity Scams
Home Equity Credit Lines
Home Equity Loans: The Three-Day Cancellation Rule
Home Equity Scams: Borrowers Beware!
Looking for the Best Mortgage?
What is predatory lending?
Don't Borrow Trouble Fact Sheet
Script for Public Service Announcements (English and Spanish)

Notices of Predatory Lending Public Hearings

Hearing on 2/21/02
Hearing on 4/17/02
Hearing on 9/12/02

Links for information about Predatory Lending

Don’t Borrow Trouble www.dontborrowtrouble.com

Local Organizations

Housing Rights Center
Bet Tzedek Legal Services
City of Los Angeles Department of Aging
Consumer Credit Counseling Service of Los Angeles
LA County Department of Consumer Affairs
LA Neighborhood Housing Services
Legal Aid Foundation of Los Angeles
Operation Hope Banking and Home Loan Centers
Public Counsel Law Center
Strategic Actions for a Just Economy

Statewide Organizations

Center for Responsible Lending (North Carolina)
California Reinvestment Coalition
Greenlining Institute

National Organizations

AARP
ACORN Housing Corporation (Association of Community Organizations for Reform Now)
Freddie Mac
National Consumer Law Center
Neighborhood Assistance Corporation of America
U.S. Department of Housing and Urban Development

borrow.htm (rev 02.10.05)