St. Paul, MN –  On May 14th, Minnesota’s Governor signed a bill (HF931/SF988) which, along with a companion bill (HF1004/SF809) he signed last month, will provide the strongest protections in the nation against predatory lending. 

Among other provisions, the bills:

• Prohibit lenders from making mortgages that the borrower has no ability to repay,either from the very beginning or after the interest rate increases
• Ban prepayment penalties on all subprime loans
• Require that mortgage brokers act in the customer’s best interest
• Place a 5% cap on the points and fees that can be charged, including any kickbacks from the lender to the broker, referred to as “yield spread premiums”

“ACORN members who have been fighting against predatory lending for years are thrilled that the state is standing up to protect Minnesota homeowners from these predatory lenders,” said Paul Satriano, a Minnesota ACORN leader and member of the organization’s national Board of Directors, who joined ACORN six years ago, after nearly losing his home to a predatory lender.

“These reforms are the first state legislative response to the current foreclosure crisis. ACORN members around the county will be working to see similar legislation passed at the state and federal level,” Satriano said.

The Minnesota legislation came out of a working group which Minn. Atty. Gen. Lori Swanson assembled as one of her first acts, signaling the problem was serious and a priority issue for her office.  The legislation was sponsored by Sen. Linda Higgins, Rep. Jim Davnie and Rep. Joe Mullery.

In addition to ACORN, the legislative effort was lead by the Legal Services Advocacy Project.  A coalition included AARP Minnesota, Minn. AFL-CIO, SEIU State Council, elected officials, faith, labor and community groups backed the bill.

To help combat an epidemic of foreclosures, ACORN last month announced plans nationally to conduct a large scale outreach program to find homeowners at risk of losing their home due to a predatory loan and to organize these homeowenrs to fight back to save their homes and win major policy changes presented in a ten point platform.

Included in the groups’s platform is a one-year moratorium on foreclosures involving loans that the group considers predatory, a demand that the group first made in March at a 500 person protest in Washington, DC at the Mortgage Bankers Association. 

ACORN members have been engaged in a major effort since 1999 to protect neighborhoods from predatory lending. The campaign has included working to shine a spotlight on and reform the practices of individual lenders, playing a leading role in passing city and state legislation against predatory lending, and winning reform from federal regulators.   

ACORN’s sister organization, ACORN Housing, provides one-on-one mortgage counseling and first-time homebuyer classes and has directly helped more than 50,000 families buy a home. Last year alone, ACORN Housing helped more than 4,800 families work out repayment or forbearance plans, loan modifications, refinances and partial claims, allowing these families to keep the equity they built in their homes.