AUGUSTA – Buyer beware: Some say it’s the consumer’s fault if they fall victim to predatory lending.

However, House Speaker Glenn Cummings, D-Portland, said the average citizen is no match for “teams of lawyers and practiced predatory lenders who excel at drafting deceiving offers and hiding fees and costs while pretending to represent the consumer’s best interests.”

Cummings presented a bill to prevent predatory lending to the Legislature’s Insurance and Financial Services Committee during a hearing Thursday.

Jennifer Richardson of Lewiston testified in support of the bill. She said she fell victim to a predatory loan plan that was financially devastating to her family.

“Mortgage brokers made it easy,” she told the committee. “They closed it as quickly as seven days; we barely had time to think.”

Cummings said some lenders hit homeowners with big payments and hidden or unreasonable fees that can result in foreclosures.

The bill has received broad support from more than 100 lawmakers and about 40 organizations. The three primary provisions are:

• Ability to pay: Lenders must have standards to assess whether a person can pay back a loan to decrease instances of foreclosure.

• Loan flipping: The bill prohibits lenders from knowingly “repeatedly refinancing loans for the purpose of charging high fees to the consumer without providing any tangible benefit,” Cummings said.

• Consumer recourse: In some situations, a loan is made and then immediately sold. The bill provides a recourse for consumers victimized by predatory lenders, “but is limited only to the amount needed to extinguish their debt and it applies only to high-rate, high-fee loans,” Cummings said.

“This bill would hold all Maine lenders to the same high standards, the same standards that many responsible Maine lenders already employ,” Cummings said in his testimony.

While opponents of the bill applauded efforts to solve the problem, they warned of risks associated with the language.

Richard Burgess of Hermon, president and senior loan officer of Mainely Mortgages, said the bill would keep a large portion of present and future homeowners from getting a mortgage or refinancing existing mortgages.

He said the bill’s guidelines make it unprofitable for lenders and brokers to provide financing because of fixed costs. It also prevents a borrower from obtaining a loan if he cannot show a secondary proof of income, Burgess said.

It also hurts self-employed people, who “can’t prove sufficient income using tax returns to qualify for a mortgage,” Burgess said.

Attorney General Steven Rowe gave the bill his support, citing Maine’s high rate of home ownership, but also a high rate of foreclosures.

“While it would be nice if everyone could qualify for a loan to buy or refinance a home, the truth is that some people simply may not be able to afford to do so,” Rowe said. “A lender does not help a family by tricking them into signing up for a mortgage load that they cannot afford.”

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