Illinois pulls plug on mandatory credit counseling pilot
CHICAGO (4/11/07)--A pilot financial counseling program geared toward curbing predatory lending practices in Illinois' low-income areas has been withdrawn by regulators.
The program, Illinois Predatory Lending Database, went into effect last September. It was designed to collect information about lenders and was also supposed to ensure that borrowers with bad credit were counseled by the Department of Housing and Urban Development (HUD) before receiving loans (American Banker April 4).
However, the program's critics insist that the requirements made it even harder for low-income individuals to get loans and created delays.
Rev. Jesse Jackson Sr. has said the program's requirements made it more difficult for low-income individuals to refinance or sell their properties.
Critics also noted that the law implied that borrowers who went through credit counseling weren't smart. Borrowers who are smart don't need to go through counseling, according to Marve Stockert, executive director of the Illinois Association of Mortgage Brokers.
Credit unions nationwide are currently fighting predatory lending practices by offering financial planning and assistance to help borrowers.
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