LEADERSHIP IN COMMUNICATION WITH CONSTITUENTS

April 6, 2000

Chicago Defender

Illinois Attorney General aide warns predatory lenders targeting elderly

Strausberg, Chinta

Illinois Attorney General aide warns predatory lenders targeting elderly

Predatory lenders who charge exorbitant mortgage rates are allegedly singling out senior citizens who've paid for their homes, Assistant Illinois Attorney General Tom James said Wednesday.

Chatham, according to a study conducted by the National Training and Information Center (NTIC), is number three in home foreclosures -- mostly among the elderly, according to Ald. Freddrenna M. Lyle (6th).

"I'm really concerned about the high rate of foreclosures" in Chatham and Englewood, which she represents. "Chatham is number three on the map, showing the largest percentage of increases since 1993," Lyle said. "I have all of the seniors who bought their homes in the late 1950's and their homes are paid off now."

She said they are now on fixed incomes and when home repairs are needed "these people come with money for them to do that" coupled with their children asking for money to pay for education. "They're really being targeted." Lyle said it pains her to see these foreclosure signs mostly on the homes of the elderly.

Lyle is taking the advice of Ald. Helen Shiller (46th), who suggested she invest in an automated telephone call in machines to tell the seniors that they may be contacted by these lenders and what to do. "It's heart wrenching to talk about someone losing their home because they didn't understand a document."

No one knows that experience better than Yolanda Payton, who was accompanied by Brenda Grauer, staff attorney from the Legal Assistance Foundation of Chicago. Payton, who lives in the 6400 block of South Artesian, is fighting her foreclosure in court.

After her husband died, Payton said her income declined and she couldn't keep up the payments. She said a Cook County deputy sheriff allegedly recommended a predatory loan company who gave her a $51,000 loan. With an income of $448 a month, she could not pay her $558 mortgage note.

Also testifying before the committee was Gale Cincotta, executive director of NTIC, who said: "Today, Chicago's neighborhoods are being buried in bad loans. Predatory lending is leading thousands of working families into foreclosure, and it's leading our neighborhoods into decline."

They made their comments during a lengthy City Council Finance Committee hearing chaired by Ald. Edward M. Burke (14th).

Ald. Ed H. Smith (28th) said the City Council has no enforcement powers over the predatory lenders "and how they rip off people like 40 going North day in and day out. The sad thing is that they're ripping off these older people who do not understand what is going on.

"People get in trouble. They want to rehab their houses, and they go and sign this paper work without a lawyer, and the first thing they know, they're being sat out and they're taking their property," Smith said.

"They can't pay their notes, and they know when they get them to sign the papers. It's sad to see people 80 years old losing their home." Smith said only education can curb this abuse. He urged everyone to check out mortgage houses before signing any papers.

Reminded that the Illinois House refused to pass an anti-predatory bill sponsored by Rep. Dan Burke (D-23rd) and that the City Council has no enforcement power over these subprime mortgage lenders, James said: "The state has power to pass laws, the city and the federal government.

"Every single stratification in our institutional structure of government has power to make and pass laws, and it has to be addressed in each and every strata. It can't be done in any one place," James said. He said there were 1300 loans included in his office's lawsuit against "unscrupulous" mortgage companies.

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