Most of the talking at the meeting was done by people like Mildred Williams, a 97-year-old Homewood woman who said she was cajoled into a mortgage with payments she can never hope to make. "I have a notice that they're going to foreclose on the house," Williams said. Another woman said she got sucked into a spiral of debt when she signed one of those "checks" you get in the mail that are actually home mortgages. A third said she missed one mortgage payment and got buried in penalties and interest. A man reported that he was convinced to repeatedly refinance, until his debt far exceeded the value of his house, and his payments ate up most of his income. And on and on.
The guest of honor, though, mostly listened and took notes. He was William Schenck, the state's new secretary of banking. His boss, Gov. Ed Rendell, has promised to do something about the high-interest, high-fee, deceptively marketed "predatory" loans that are leading to record numbers of foreclosures in many Pennsylvania counties. Schenck knows mortgage banking. The Pittsburgh resident worked his way up to the rank of executive vice president at PNC Financial Services before leaving in 1995 to lead a series of companies, including Boston-based Fleet Mortgage. A Fleet affiliate had faced predatory lending charges in the early 1990s, but now Fleet frequently helps community groups refinance bad loans made by other lenders.
After two hours of tales of lousy loans, Schenck seemed to be raring to fight. "We just can't wait for legislation," he said. "We've got to do something now. & If we can find a half dozen [predatory companies] and do something about it, and do it publicly, that sends a message." Later, though, Schenck conceded that he's not sure what his powers as banking czar are. "What I have to do is find out what we can do."
The state legislature in 2001 passed a so-called predatory lending reform bill that actually served to protect the lenders against new regulations passed by Philadelphia and then under consideration in Pittsburgh. State Sen. Jim Ferlo of Highland Park said he hopes to see a real reform bill move forward -- one that bars lenders from lending more than a property is worth, setting up payments a borrower can't afford and paying home improvement contractors before their work is done. "Let's follow up this meeting with an organized strategy session," Ferlo said.
Such a meeting may be well attended, now that an array of community groups is mobilized against predatory lending. Besides ACORN, the meeting was attended by representatives of the Pittsburgh Community Reinvestment Group, AARP, the Fair Housing Partnership, Action Housing, Housing Opportunities Inc., the NAACP, the Urban League and various neighborhood groups. "All the groups here show a solidarity that we haven't seen in this community in a long time," said ACORN organizer Maryellen Hayden.
To report a bad loan to Schenck's department, call 1-800-PABANKS.