Principles of Fairness in Lending
Our goal is simple – to establish fair credit policies and practices.
Lending
is necessary in our society and can be helpful in building and
preserving community and individual assets. Our laws, however, allow
lenders to encourage and profit enormously from personal debt.
Discrimination and the selling of unaffordable and abusive loans is
rampant. Practices that used to be called ‘loan-sharking’ are now
legal. Borrower protections cannot be left to the lenders. We propose
these six components of fair lending against which all credit practices
and products must be tested – across the life of the loan and its
collection.
AFFIL’S SIX PRINCIPLES OF FAIRNESS IN LENDING
RESPONSIBILITY:
Lenders must gauge ability to repay and offer borrowers the most
affordable and well-suited products for which they qualify. Lenders
should demonstrate commitment to the building of personal assets.
JUSTICE:
All participants in the making, collecting, holding and buying of debt
have a duty to deal fairly with the borrower. It is unjust to prey
upon anyone, particularly on those who are vulnerable due to age,
health, language, education or other socioeconomic circumstances. It is
unjust to charge exorbitant interest rates and fees, to change terms
once agreed, and to deny anyone their day in court.
EQUALITY:
We all must have equal access to appropriate and fair products and
services regardless of race, gender, language, national origin,
physical/mental well-being, education, lifestyle or socioeconomic
status. All discriminatory lending practices must be abolished.
INFORMATION:
We require full disclosure of all costs, fees, loan terms, penalties
and collection practices in language that is clearly understood by the
borrower. Although information is a necessary component to a fair
marketplace, it is not a substitute for fair terms, fair treatment and
effective regulation.
ACCOUNTABILITY:
Lenders must track and report their lending activity. Only with
comprehensive reporting can we ensure that the marketplace is free from
illegal and unethical practices and that consumers are safe to shop for
credit products without risk of being overcharged or directed to
inappropriate loans.
LAW & ENFORCEMENT: Our
government must establish essential consumer safeguards in the lending
marketplace with laws that hold all members of the lending industry
liable for activities throughout the life of the loan and its
collection. There must be mechanisms for reporting abusers, and
compensation for victims of lending abuse.
