Elaine Price at Local Summit:
Predatory Lending Widespread in Westchester

by Harold Wolfson

Also see: Westchester's New Law Against Predatory Lending

( December 12, 2002) Predatory lending is rampant in Westchester, said Elaine Price, head of the Westchester County Department of Consumer Protection at the November meeting of the Local Summit.

Ms. Price, a resident of Larchmont and former Supervisor of the Town of Mamaroneck told the group that unfair and often illegal lending schemes are most commonly aimed at elderly and minority homeowners.

“The target individuals are commonly real estate rich and cash poor,” she explained to the twenty-five members of the Local Summit breakfasting at the Mamaroneck Diner.

She shared a typical case with the group. “Adelia was 87-years old and owned two homes that had been in her family for 50 years,” Ms. Price recounted. A home improvement contractor convinced her that he could reconfigure and repair the houses and she could then rent them profitably. He said he had a friend, a banker, who would lend her the money.

Adelia signed up for a $300,000 loan at about 12% interest, pledging the full equity on the two houses. When the work was done Adelia did rent out apartments. But the rent never equaled the loan payments and Adelia went into default. The lender took possession of the property and Adelia was out.

In addition to high interest payments like Adelia's, predatory loans often include hidden fees and harsh terms. Often the loans are not kept by the local originating institution but resold to distant loan buyers, which makes prosecution more burdensome.

In addition, the law is ambiguous in many of these cases, Ms Price said. “This creates difficulties, and so we do go after many perpetrators on human rights abuse charges.”

Her department has a banker and a lawyer on its Consumer Advisory Council who can review loan agreements for possible predatory practices. The department is spreading its message broadly, particularly to churches and organizations catering to minorities and the elderly. For more information, you can phone Ms. Price at 995-2155.

The Local Summit undertakes projects in Larchmont and Mamaroneck to help make the community a better place for everyone to live. For information, call Harold Wolfson 834-6229.

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