Industry News

Governor suspends Chicago anti-predatory-lending program

Study found sales in affected neighborhoods down by nearly half

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Illinois Gov. Rod Blagojevich has suspended a controversial program intended to stop predatory lending in 10 Chicago-area ZIP codes after a study found housing sales in the predominantly minority neighborhoods dropped by nearly half after the program went into effect. Legislators who sponsored the legislation that created the program said it was working and questioned the governor's authority to suspend it. The Illinois Predatory Lending Database Pilot Program, created by the passage of House Bill 4050, took effect Sept. 1. The program, which does not apply to federally chartered banks, required residents who fall short of certain credit and income thresholds to seek financial counseling. The 10 ZIP codes where the four-year pilot program was implemented (60620, 60621, 60623, 60628, 60629, 60632, 60636, 60638, 60643 and 60652) were chosen because of above-average foreclosure rates and a high proportion of predatory loans, proponents said. But critics say the program chilled housi...