BALTIMORE - The U.S. Department of Housing and Urban Development and the Department of the Treasury today held the fourth of five joint regional forums to address predatory lending.

While expanded access to credit from both prime and subprime lenders has contributed to the highest homeownership rates in the nation's history, there is growing evidence that some lenders are engaging in predatory lending practices - excessive front-end fees, single premium credit life insurance, and exorbitant prepayment penalties - that make homeownership much more costly for families that can least afford it.

HUD Secretary Andrew Cuomo said: "Homeownership is at record levels, but so too is predatory lending, especially in elderly, minority and low-income communities. Striking hardest at the equity rich, but cash poor, predatory lenders are stripping thousands upon thousands of Americans of certainly their biggest and probably their most precious possession - their homes. We are announcing today a comprehensive set of steps to protect FHA homeowners and homebuyers from predatory lenders. But our joint forums across the country demonstrate that more remains to be done. Our report to Congress will identify how best to protect those currently unprotected against those who are transforming the dream of homeownership into a nightmare."

Treasury Secretary Lawrence Summers said: "We must not let the abusive practices of some lenders undo the enormous progress that families have made thus far. Abusive practices should have no place in the subprime market, or any other market."

Personal testimony about specific instances of predatory lending in Baltimore was offered at the forum in the city. Joint HUD-Treasury forums on predatory lending already have been held in Atlanta, Los Angeles and New York with the last forum to be held next week in Chicago.

At today's forum, HUD released a study - Unequal Burden in Baltimore: Income and Racial Disparities in Subprime Lending in America - that analyzed data reported under the Home Mortgage Disclosure Act. Reflecting national trends, it found that: 1) From 1993 to 1998, the number of subprime refinancing loans increased more than ten-fold in Baltimore. 2) Subprime loans are seven times more likely in low-income neighborhoods than in high-income ones. 3) Subprime loans are almost six times more likely in black neighborhoods than in white ones. 4) Homeowners in moderate-income black areas are almost four times as likely as homeowners in low-income white areas to have subprime loans. 5) Low-income black borrowers were more than three times more likely than low-income white borrowers to have subprime loans in the Baltimore metropolitan area.

The HUD study focused primarily on home refinancing loans, which account for nearly 80 percent of subprime loans. Subprime lending involves providing credit to borrowers with past credit problems, who cannot qualify for the conventional prime market.

Subprime lending can help to expand access to credit for more Americans. However, some lenders may engage in predatory or abusive lending practices that can hit homebuyers with excessive mortgage fees, interest rates, penalties and pre-paid credit life insurance charges, loan flipping, or home improvement scams that can raise the cost of home ownership for families.

Later this summer, following the conclusion of the five joint HUD-Treasury forums, Secretary Cuomo and Secretary Summers will issue a joint report with recommendations on how to address these problems. At the forum today were some of the 28 members of the HUD-Treasury Task Force on Predatory Lending, comprised of housing experts, lenders, elected officials, bankers and consumer advocates as well as other national experts and participants from the region.

HUD and Treasury will: