DISB Partners With Councilmember at Predatory Lending Workshop

DISB collaborated with Ward 5 Councilmember Harry Thomas Jr. on June 9 to present at a predatory lending workshop at the Trinidad Recreation Center. DISB’s presentation focused on predatory residential mortgage lending, subprime loans and how Ward 5 consumers can protect themselves. They learned about the characteristics of residential real estate-related transactions that may be predatory, the subprime market versus the prime market, common abuses, lack of mandatory escrow accounts, types of mortgages to avoid, and payday loan myths and abuses. These types of loans are of special concern to Ward 5 as the most recent data revealed that homebuyers in Ward 5 were almost 10 times more likely to receive a home purchase loan from a subprime lender than those in Ward 3. Additionally, Ward 5 is home to a large number of payday loan offices.

Public Oversight Roundtable on Financial Literacy and Education in the District

DISB Commissioner Thomas E. Hampton recently proposed that the District needs to create a Financial Literacy Council, which includes all sectors of the economy—private sector, the public sector and nonprofit organizations. This proposed council, which he said should be an independent entity, should comprise members appointed both by the Council of the District of Columbia and by the Mayor, and work closely with the City Council and DISB. Commissioner Hampton made the suggestion, among others, before Councilmember Mary Cheh, chair of the Committee on Public Services and Consumer Affairs, who held a public oversight roundtable on the topic of “Financial Literacy and Education in the District of Columbia,” on June 28.

District residents need access to accurate and unbiased information and resources that will help them reduce debt, save more, avoid financial scams and build wealth, according to Councilmember Cheh. The roundtable sought ideas to explore ways in which financial literacy and education programs can be delivered to, and used by District residents. Commissioner Hampton also discussed the ways in which DISB, under his leadership, has focused much of its priorities on financial education. The agency has launched and developed several sustainable new initiatives for consumer education that has had positive feedback by District consumers. These include the DC Saves Campaign, the monthly DISB First-Wednesdays seminars, the Wise and Safe Investing seminars for seniors, the monthly @yourlibrary seminars at Martin Luther King Jr. Library, community town hall meetings on issues such as investor education, fraud, mortgage lending and theme months (Financial Literacy Month in April, Fraud Awareness Week in July, Life Insurance Awareness Month in September and a planned Health Awareness Month in November) to call attention to special consumer financial issues. 

DISB Supports Payday Loan Legislation

DISB Commissioner Thomas E. Hampton testified June 21 in support of the Payday Loan Consumer Protection Act of 2007, which amends the Check Cashers Act of 1998 to restrict certain lending practices by payday lenders. Commissioner Hampton stated that DISB “supports any efforts to eliminate the abusive practices sometimes associated with payday lending. In many situations, payday lenders take advantage of consumers who believe this type of financing is the only option available and, therefore, are willing to accept whatever cost is levied.” He made his comments before the Council of the District of Columbia’s Committee on Public Services and Consumer Affairs. The legislation was sponsored by the committee’s chair, Councilmember Mary Cheh (Ward 3). The hearing considered legislation to re-examine a nine-year-old law allowing payday loan lenders to charge triple-digit interest rates. The District’s existing usury law caps interest on unsecured loans at 24 percent. The current payday loan fees are often the equivalent of more than 400 percent annual interest. The legislation would subject payday loans to the same cap as other unsecured loans. Payday loans are typically small, short-term cash advances made to borrowers in need of cash. The loans are secured by a personal check for the principal and fees. The lender holds the check usually until the borrower’s next payday. At that time, the borrower has the option of allowing the lender to deposit the check or “roll over” the loan, if unable to repay at the initial due date. DISB regulates the financial industries in the District of Columbia, including payday lenders and check cashers. The Council voted for the bill on July 10.

Justice Department Alerts Public About Fraudulent Spam Email

The US Department of Justice (DOJ) has recently become aware of fraudulent spam e-mail messages claiming to be from DOJ. Based upon complaints from the public, the fraudulent messages are addressed “Dear Citizen.”  The messages assert that recipients or their businesses have been the subject of complaints filed with DOJ and forwarded to the Internal Revenue Service.  In addition, such e-mail messages may provide a case number, and state that the complaint was “filled [sic] by Mr. Henry Stewart.” A DOJ logo may appear at the top of the email message or in an attached file.  Finally, the message may include an attachment that supposedly contains a copy of the complaint and contact information for Mr. Stewart. The DOJ warns that these e-mail messages are a hoax and that recipients of these messages should not respond. The DOJ did not send these unsolicited e-mail messages—and would not send such messages to the public via e-mail.

Similar hoaxes have been recently sent in the names of various governmental entities, including the Federal Bureau of Investigation, the Federal Trade Commission and the Internal Revenue Service. E-mail users should be especially wary of unsolicited warning messages that purport to come from U.S. governmental agencies directing them to click on file attachments or to provide sensitive personal information. These spam email messages are bogus and should be immediately deleted. Computers may be put at risk simply by an attempt to examine these messages for signs of fraud. It is possible that by “double-clicking” on attachments to these messages, recipients will cause malicious software – e.g., viruses, keystroke loggers or other Trojan horse programs – to be launched on their computers. Do not open any attachment to such messages.  Delete the e-mail.  Empty the deleted items folder. If you have received this, or a similar hoax, please file a complaint at www.IC3.gov.

Beware of Advance Fee Loan Scams

DISB is issuing a warning to all District residents to be careful of lenders or loan brokers who illegally charge a fee for the promise of a loan. Collecting a fee upfront to secure a loan is illegal. Typically, advance fee loan scams target consumers with bad credit or those with an immediate need for money. Initial contact may be through an Internet Web site, e-mail, newspaper advertisement or telephone solicitation, and a toll-free number is often provided for additional information. Once an application is submitted, consumers are typically lured into paying a fee, to guarantee the loan—ranging from $25 to several thousand dollars, depending on the loan amount requested. In many instances, after consumers wire or mail a fee to the broker, lender or insurance company, they never receive the promised loan.

The companies listed below have advertised business addresses in the District of Columbia, but they are not licensed or registered in the District of Columbia and do not conduct business at these addresses. These companies have solicited advance fees to guarantee loans and have instructed consumers to wire funds to Canada and Atlanta, GA.

MA Nationwide Lending
325 Fifth Street, NW
Washington, DC 20001

Paragon Group, Inc.
1775 Massachusetts Avenue, NW
Washington, DC 20036

Trafalger Group, Inc.
1934 K Street, NW
Washington, DC 20006

CitiLine Financial
1030 15th Street, NW
Washington, DC 20005

Financial Credit Solutions
905 F Street, NW
Washington, DC 20044

Fortuna Monetary Services
730 11th Street, NW
Washington, DC 20001

Consumers with any questions or complaints about any of these companies are urged to call DISB at (202) 727-8000 or visit our website at disb.dc.gov.

Consumer Alert on Mortgage Payment Increases

DISB Commissioner Thomas E. Hampton issued a consumer alert in June urging homeowners with adjustable rate mortgages—especially those with nontraditional mortgages—to plan now for the scheduled “recasts” or “resets” of interest rates in the year ahead. The advisory urges borrowers to seek information on the characteristics of their mortgage, budget accordingly, contact their servicer for assistance, if needed, inquire about the terms of any prepayment penalty and ask about possible solutions if payments are past due. The advisory notes that nontraditional mortgage loans and many subprime loans frequently feature a recast (or reset) with a significant payment increase.

DISB also issued an industry letter encouraging mortgage servicers and providers to reach out to consumers to provide information on their loans and to work with consumers to avoid foreclosure.

“Servicers should provide information on when the recast will occur and how much the monthly payment will adjust,” said Commissioner Hampton. “Should the loans go into default, loan providers  should consider workout arrangements to prevent foreclosures.” He noted the efforts by the NeighborWorks organization, which has established a hotline (888-995-HOPE) to reach struggling homeowners with strategic solutions. Consumers can find a copy of the alert on DISB’s website at disb.dc.gov. Or call DISB at (202) 727-8000 if they have any concerns about their mortgage payments.

Seminar on Insurance for Small Business

DISB and the Washington, DC Economic Partnership (WDCEP) hosted an early-morning seminar on July 18 to introduce a new comprehensive public education resource to help small businesses understand and address business risks with insurance options. The online resource, Insure U for Small Business, features an education curriculum with six categories of information for small businesses: workers’ compensation; group health and disability; business property and liability; commercial auto; group life and key person life; and home-based business insurance. After reviewing the curriculum’s helpful explanations, tips and considerations, small business owners and managers can test their knowledge about insurance issues by taking an online quiz. Upon successful completion, they can download an Insure U for Small Business diploma.

DISB Commissioner Thomas E. Hampton presents Insure U for Small Business to the District’s small business community on July 18. Washington, DC Economic Partnership’s Manager of Business Development Natalie Cofield stands to the side.

DISB Commissioner Thomas E. Hampton introduced research done in March by the National Association of Insurance Commissioners (NAIC), of which DISB is a member, which revealed that many small businesses—those with fewer than 100 employees—are exposed to serious risks that could be mitigated by a better understanding of insurance options. Key findings of the research show that only 47 percent of small businesses offer heath insurance to their employees. Of those, 24 percent report changing the fee structure, deductibles or other components in the past year to offset the rising cost of premiums. Among home-based businesses—22 percent of the NAIC survey—48 percent depend on their homeowners insurance to protect their businesses. However, most homeowners’ insurance policies severely limit coverage of business property and may totally exclude business-related liability claims. The seminar attracted representatives from the office of the Deputy Mayor for Economic Development as well as from the Department of Small and Local Business Development. Both discussed some of the initiatives from their agencies.

For more information about Insure U, consumers can visit DISB’s website at disb.dc.gov. The Insure U for Small Business curriculum is available at www.insureUonline.org/smallbusiness.

Legislation to Create Affordable Housing Directory Introduced

Ward 6 Councilmember Tommy Wells recently introduced the Affordable Housing Clearinghouse Directory Act of 2007 that would create a Clearinghouse Directory to be maintained by the District’s mayor. The legislation requires development projects receiving public funds and assistance—whether through tax abatement, tax increment financing, direct appropriation or other means—to file quarterly reports containing information on affordable housing units being created. The directory would become a resource for District residents needing information about where and when affordable units will be constructed, income qualifications, type of housing, number of bedrooms and bathrooms and contact information. While the legislation requires the directory to be maintained online, print copies will be made available at several public offices throughout the District to ensure access to all residents.