AARP Survey: Americans 50+ Don't Shop Around Before Selecting Home Loan Lender

Consumers Open to Predatory Lending Abuses

Portland, Maine A new AARP survey shows that more than a quarter of Americans over 50 (28 percent) selected lenders for home loans based on ads or solicitations and that more than half (52 percent) failed to comparison shop before taking the loan. AARP points out that this can leave American consumers over age 50 open to predatory lending practices.

"Predatory mortgage lendingthreaten(s) the stability of home ownership for older Americans," said AARP National Legislative Council Member Anthony Ludovico today in announcing the results of the survey. They are more likely to find they have agreed to higher rates than they can repay or excessive fees that drive up the loan cost beyond their financial capacity.

Ludovico noted, however, that "many solicitations are not deceptive or unfair, and the information provided may be of value to consumers."

Ludovico told a panel of State Attorneys General that the new survey of Americans over 50 shows that more than eight in ten (85 percent) have seen home equity loan ads in the past year and nearly as many (73 percent) have received direct solicitations to take out such a loan.

"AARP remains concerned with any subprime lending which includes predatory lending," said Ludovico, of Canton Center, Connecticut. Subprime mortgage lenders extend credit at higher than prime rates to many groups of borrowers, some, but not all of whom are higher risk or have impaired credit.

The AARP official said that predatory practices:

• Take advantage of a borrower's inexperience, vulnerabilities or lack of information;
• Are priced at an interest rate - and include fees - that cannot be justified by the credit risk;
• Manipulate a borrower to obtain a loan they cannot afford to repay or
• Simply defraud the borrower.

The disclosures by Ludovico came before a predatory lending "summit" hosted by Maine Attorney General Andrew Ketterer, president of the National Association of Attorneys General (NAAG).

Attorneys General scheduled to attend the event, in addition to Ketterer, were those from Florida, Georgia, New Hampshire, and Vermont. Other participants included predatory lending victims, representatives of the lending industry, and federal regulators.

AARP has been a leader in the drive against predatory mortgage lending in recent years, launching a multi-pronged campaign at the national, state and local levels. Through litigation, research and contacts with regulatory agencies and legislative bodies, AARP gives voice to Americans age 50 plus who face predatory practices that often target those with low and moderate incomes.

In his statement prepared for delivery to the NAAG conference, Ludovico revealed that the new AARP survey found that among the 73 percent who had been solicited in the past year, 92 percent had received direct mail, 38 percent had received a phone pitch, and 12 percent had been approached via E-mail.

"AARP will continue to challenge unfair practices affecting consumers seeking credit through legislative and regulatory advocacy, litigation and public education," Ludovico said.

Ludovico noted that AARP had built highly successful collaborations with Attorneys General nationwide in the past on "shared efforts against fraudulent telemarketers," and said the organization hoped to build on that relationship to fight predatory lending in the future.

The survey was conducted for AARP by ICR of Media, Pennsylvania. The firm interviewed 1,700 fifty plus Americans by phone between October 13 and 31.

AARP is the nation's leading organization for people age 50 and older. It serves their needs and interests through information and education, advocacy, and community services which are provided by a network of local chapters and experienced volunteers throughout the country. The organization also offers members a wide range of special benefits and services.