Industry NewsMortgage

Lenders shun areas covered by anti-predatory-lending law

New law requires some in 10 Chicago ZIP codes to get counseling

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A new law that requires some Chicago residents in 10 ZIP codes to get counseling before obtaining a mortgage loan is scaring lenders away from those areas, critics claim. A spokesman for one of the law's sponsors, Illinois Speaker of the House Mike Madigan, said the allegations are part of a continuing campaign against the new regulations by "predatory lenders and their allies." The Predatory Lending Database Pilot Program -- commonly referred to after the legislation that created it, House Bill 4050 -- took effect Sept. 1. It requires residents who fall short of certain credit and income thresholds to get financial counseling. The 10 ZIP codes where the four-year pilot program is being implemented were chosen because of above-average foreclosure rates and a high proportion of predatory loans. The Illinois Association of Mortgage Brokers has circulated a list of about two dozen lenders that have curtailed business in the affected ZIP codes, and says some have stopped lending there al...