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Gallagher Hosts Public Education Forum on Predatory Lending in Jacksonville

4/10/2003

CONTACT: Tami Torres
(850) 413-2842
Karen Randall
(904) 798-5814

TALLAHASSEE – At a public forum today in Jacksonville, Chief Financial Officer Tom Gallagher, consumer groups and the financial services community heard from several area residents about their struggles and experiences with predatory lenders. Also on-hand to testify at the forum were representatives from the Navy and Marine Corp Relief Society, Florida Legal Aid Services, and the local Better Business Bureau.

Participating with Gallagher as panelists at the forum were Charles Milsted, Associate State Director with the American Association of Retired Persons (AARP), Larry Kirkman, President of First Florida Credit Union, Rick Doeschler with First Guaranty Bank & Trust, Tom Morcom with the Florida Association of Mortgage Brokers, and Elsie Crowell, Consumer Advocate for the Department of Financial Services.

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.

"Predatory lenders offer easy access to money but leave consumers vulnerable to inflated interest rates, exorbitant fees and harassing collection tactics," said Gallagher, who heads up the Department of Financial Services. The department has received more than 1,400 complaints about predatory lending practices.

Gallagher's agency, along with the financial services community and AARP, kicked off a public education campaign last month to help educate and warn the public about predatory lending practices. "An informed borrower is less vulnerable to fraud and abuse," Gallagher said.

As part of the public education campaign, public service announcements for both radio and
television started airing March 15. In addition to the public forum held in Jacksonville today, forums will be held in several cities over the next two months, including Ft. Lauderdale, Ft. Myers, Pensacola and the Tampa Bay area. The Florida Bankers Association, the Florida Association of Mortgage Brokers and the Florida Financial Services Association have offered financial support of the public education campaign.

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.

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 www.fldfs.com and click on the link for "Consumer Tips on Predatory Lending."