Privacy, Predatory Lending Top the Industry's List of Legal Concerns.(mortgage lenders)(Brief Article)

The hottest consumer advocacy issues facing the industry right now are privacy rules and predatory lending, according to attorneys who spoke at the MBA National Mortgage Servicing Conference here.

And it's not just the risk of litigation that worries lenders. A company's reputation is at stake too.

"You don't want to be called a predatory lender for obvious reasons," said Steven Kaplan, an associate with Kirkpatrick & Lockhart, Washington, D.C.

While most predatory lending violations focus on loan origination practices, Mr. Kaplan warned that the liability "will follow these loans," an issue that worries servicers and Wall Street firms that securitize loans.

The concerns are greatest for subprime lenders, since many people associate subprime credit quality lending with the phrase 'predatory lending.'

Lenders face a compliance nightmare in trying to avoid predatory lending charges, he said, because different states and regulatory agencies have varying opinions about what practices cross the boundary to become violations of consumers' interests.

He urged lenders to focus on the law in this area and monitor changes in the legal and regulatory environment. Lenders also should have policies that guide their compliance, he said.