Predatory Protection

In an attempt to help sort out some of the confusion about predatory lending laws, the federal Office of the Comptroller of the Currency recently issued a rule defining the types of state laws that apply to national banks that included a strong anti-predatory lending standard. The new rule preempts state laws regulating loan terms, imposing conditions on lending and deposit relationships, and requiring state licenses. It also declares that national banks may not make consumer loans based predominantly on the foreclosure or liquidation value of a borrower’s collateral. That restriction prevents lenders from extending credit with an eye toward seizing a borrower’s house, a common aspect of predatory lending.