Predatory-lending program generates stream of calls

The organizers of the "Don't Borrow Trouble" campaign were fairly certain that northern Nevada consumers needed to talk about predatory lending schemes.

And how.

In the first two weeks after the educational program was launched, the public- and private-sector groups that joined forces received about a dozen calls a week from homeowners who feared lenders were looking to strip their equity.

Within a day after the campaign's first billboard went up at the corner of Liberty and Sierra in downtown Reno, in fact, the campaign fielded about 10 calls from worried homeowners.

Along with billboards, the campaign uses radio and TV spots, brochures and a Web site to caution consumers to slow down whenever they see a home loan deal that looks too good to be true.

The program, similar to efforts launched in Boston and other cities, arose from worries about the flood of mailings that most homeowners receive, encouraging them to refinance or cash out with home equity loans, said Thomas Vetica of the Reno office of the U.S.

Department of Housing and Urban Development.

His office took the lead in the new effort.

Some of those mailings, Vetica said, appear to be targeting seniors and minorities who may not understand the offers.

That's no small issue in Washoe County, where approximately 90 percent of residents 55 and older live in their own homes and where they're getting numerous offers to get cash through reverse mortgages that drain their equity.

The growing number of authors and TV infomercial hosts who teach would-be entrepreneurs how to get rich by seeking out troubled homeowners provides more fuel to the worries of housing officials.

"We were convinced it's time to do some outreach," said Vetica."It's preventive medicine."

But even while organizers agreed on the need to educate homeowners in a hurry, they acknowledged that there's no clear definition of "predatory lending" in the mortgage field.

But among the signs,Vetica said, are excessive interest rates or fees and high-pressure tactics.

He said observers also are seeing instances in which lenders encourage homeowners to refinance time and again, generating more fees each time.

The "Don't Borrow Trouble" campaign, scheduled to run for a year, is financed by nearly $150,000 provided by Freddie Mac, the big provider of wholesale mortgage funds, as well as financial institutions and other lending- related businesses in northern Nevada.

Charles Schwab Bank, for instance, was among the first to sign on.

"Part of our goal is to help educate consumers about good financial choices," says Nancy Muniz, community development manager for the Reno-based institution.

Executives at Wells Fargo, another participant in the program, see the growing complexity of borrowing options as a reason to continue their efforts at consumer education.

"With the myriad of lending options available today, education is an important element of making smart credit decisions," said Chad Osorno, senior vice president for Wells Fargo Bank in northern Nevada.

Other lenders,Vetica says, have come on board as the program built momentum in late September.

None of the public-sector agencies sponsoring the program are charging administrative fees.

"All the money is going directly to advertising and community outreach," said Vetica.

The campaign used advertising materials developed in other markets.

Nationwide, the program has been rolled out in about 30 markets and has generated more than 30,000 inquiries from homeowners.

In northern Nevada,Vetica said the ultimate hope of supporters of "Don't Borrow Trouble" is that consumers become so well educated that the flood of mailings from lenders slows.

"We're hoping to really impact the frequency of those unsolicited requests," he says.

"We hope to help people save their home." The players Initial participants in the 'Don't Borrow Trouble' campaign incude the Nevada Attorney General's Office; Charles Schwab Bank; Citizens for Affordable Homes, Inc.

of Carson City; City of Reno; City of Sparks; Consumer Credit Counseling Services of Northern Nevada; Consumer Credit Affiliates; Freddie Mac; Radio Lazer; Silver State Fair Housing Council; U.S.

Bank; U.S.

Department of Housing and Urban Development, Washoe Legal Services; and Wells Fargo Bank.