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Gallagher Kicks off Education Campaign to Warn Consumers about the Dangers of Predatory Lending


CONTACT: Tami Torres

TALLAHASSEE – Chief Financial Officer Tom Gallagher joined state lawmakers, consumer groups and the financial services community in kicking off a statewide campaign today to educate and warn the public about predatory lending practices. Joining Gallagher at the press conference were Sen. Bill Posey, Reps. Will Kendrick, Nancy Detert, Bob Allen and Dorothy Bendross-Mindingall, and representatives from the American Association of Retired Persons, the Florida Bankers Association, the Florida Association of Mortgage Brokers, the Florida Financial Services Association, and the Florida Credit Union League.

"Predatory lenders offer easy access to money but leave consumers vulnerable to inflated interest rates, exorbitant fees and harassing collection tactics," said Gallagher, agency head for the the Department of Financial Services. "We are urging consumers to beware of high-pressure sales tactics and to carefully consider costs and repayment terms before taking out a loan."

The department has received more than 1,400 complaints about predatory lending practices.
Sherie Enwright from Port Charlotte traveled to Tallahassee for the press conference to share her story and warn others against paying fees in advance for a loan that may never materialize.

Predatory lending occurs when a borrower is charged excessive fees or obtains a loan that is impossible to repay. Predatory lenders often aggressively market loans to consumers who have limited access to mainstream sources of credit, such as the elderly, military personnel and homeowners in low-income neighborhoods.

"Seniors with limited resources are often targeted because they have built a large amount of equity in their homes. In fact, almost 80 percent of older Americans are homeowners and a majority own their homes free and clear," said William Clark, Associate State Director with AARP. "Predatory lenders are banking on a senior's inability to repay the loan and can force them into foreclosure and then resell that home for a profit."

Last year, state lawmakers passed the Florida Fair Lending Act, which aimed at cracking down on predatory lenders. The new law requires lenders to disclose certain facts prior to closing a loan and prohibits deceptive loan tactics, including:

§ extending credit regardless of a borrower's ability to pay,
§ calling a loan due even though the borrower has complied with the terms of the loan,
§ refinancing a loan during the first 18 months unless there is a benefit to the borrower,
§ charging pre-payment penalties for longer than three years,
§ increasing interest on loans going into default, and
§ balloon payments on loans that mature in less than 10 years.

"Under the Florida Fair Lending Act, Florida's most vulnerable seniors and minorities now have refuge from the risk of losing their homes," said Representative Kendrick, who sponsored the Act. "I commend CFO Gallagher for supporting the industry in spreading the word that Florida will not tolerate these practices on our citizens."

As part of the public education campaign, public service announcements for both radio and television have been developed and will begin airing on March 15. Public forums will also be held in several cities over the next two months, including Ft. Lauderdale, Jacksonville and the Tampa Bay area. The University of Florida's Cooperative Extension Service also plans to partner with the department in educating consumers.

"Lending institutions have a responsibility to help educate consumers on the potential pluses and pitfalls associated with taking out a loan," said Gwen Virostek, Senior Vice President of Washington Mutual and member of the Florida Bankers Association.

Mary Spearman, Immediate Past President with the Florida Association of Mortgage Brokers, agrees. "Consumers should shop and compare both rates and costs when obtaining a loan," she said. "We would also recommend that consumers check with the state to see if their mortgage broker is licensed and if there are any complaints filed against that mortgage broker or mortgage company."

Joesph Shuler, President of the Florida Financial Services Association said, "The American Financial Services Association and the Florida Financial Services Association have long supported consumer education initiatives and are proud to be part this education campaign."

All three organizations have offered financial support of the public education campaign.

To verify if a company or broker is licensed or to get tips on avoiding predatory lending practices, consumers can contact the Department of Financial Services' toll-free helpline at 1-800-342-2762 or log on to the department's website at and click on the link for "Consumer Tips on Predatory Lending."