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This Board makes the following findings:
1. Many San Franciscans, particularly poor, elderly, and minority residents, have expressed concern and apprehension regarding home lenders who aggressively market high-cost home loans in their neighborhoods and who may engage in unfair or fraudulent credit practices with the potential to destroy financial resources based on home equity.
2. The HUD Treasury Task Force on Predatory Lending, in its report entitled "Curbing Predatory Home Mortgage Lending" (the "HUD/Treasury report"), has documented and analyzed the problem of predatory lending in home mortgage lending. The HUD/Treasury report identified the four major predatory practices occurring in the sub-prime lending market as "loan flipping" (successive refinancing with added fees and prepayment penalties), "packing" (unjustifiably high fees and hidden fees), "asset based lending" (lending without regard for the borrower's ability to pay) and outright fraud and abuse. The burden of these practices fall predominantly on minorities, women and the elderly in minority or low-income neighborhoods without access to mainstream sources of credit.
3. The HUD/Treasury report found that consumer literacy and disclosure would assist borrowers in avoiding predatory practices and recommended expanded access to consumer loan counseling.
4. The State legislature recently passed AB 489, adding Division 1.6 to the Financial Code, and imposing requirements on consumer loans secured by real property. AB 489 prohibits various practices associated with predatory lending and provides civil penalties for violations.
5. State and federal regulation of real estate lenders and loans, in combination with legally mandated loan disclosure requirements are insufficient to provide protection of targeted communities against the abuses of predatory lenders. The Board finds that a consumer counseling and education program at the local level is the most effective way to provide consumer protection against predatory lending practices within the City and County of San Francisco.
6. The Department of Disability and Aging Services currently provides assistance to victims of predatory lending practices in San Francisco. The Department works with nonprofit and other organizations involved in predatory lending counseling and education programs, but has no mandate or funding to develop its own program for these vitally needed services.
(Added by Ord. 50-02, File No. 012004, App. 4/26/2002; amended by Ord. 109-24, File No. 240281, App. 6/6/2024, Eff. 7/7/2024)
A. The Department of Disability and Aging Services shall develop and commence a one-year program to educate San Franciscans about predatory loan practices and to prevent sub-prime lenders from targeting low-income neighborhoods for predatory loans. All City Departments shall cooperate with and assist the Department of Disability and Aging Services in developing and administering the consumer loan education program.
B. The program shall, at a minimum:
1. Provide a clear definition of predatory lending and an easy to understand explanation of predatory lending practices in selected educational materials.
2. Provide and distribute educational materials and training on consumer loans secured by real property. All education materials and training sessions shall be available in multiple languages, consistent with the San Francisco population base.
3. Specify interest rate, fee and point triggers to assist consumers in identifying high cost loans.
4. Distribute consumer information and telephone referral numbers of governmental and nonprofit agencies which provide assistance to victims of predatory loan practices. Information shall be provided to San Francisco residents through mailed brochures in property tax bills, postcards, public service announcements and cooperation with local nonprofit organizations and community groups to organize seminars on predatory lending.
C. The Department may provide consumer loan educational services using City personnel, cooperating nonprofit organizations and institutions, consultants and contractors, or any combination of these resources in an effort to reach a citywide audience.
(Added by Ord. 50-02, File No. 012004, App. 4/26/2002; amended by Ord. 109-24, File No. 240281, App. 6/6/2024, Eff. 7/7/2024)
A. The Department of Disability and Aging Services shall commence a one-year program to provide free or low-cost financial counseling to individuals with outstanding loans and individuals who apply for loans secured by their residence property located in San Francisco. Financial counseling shall include:
1. Review of loan documents and an explanation of all terms and conditions of a consumer loan.
2. An explanation of consumer rights under state and federal laws which regulate loan practices, verification that all loan documents have been supplied, and that all required disclosures are complete.
B. The Department shall not make personal financial assessments for individuals, recommend particular lenders, or provide legal advice. The Department may provide consumer loan counseling services using City personnel, cooperating nonprofit organizations and institutions, consultants and contractors, or any combination of these resources in an effort to reach a citywide audience. All City Departments shall cooperate with and assist the Department of Disability and Aging Services in developing and administering the consumer loan counseling program.
(Added by Ord. 50-02, File No. 012004, App. 4/26/2002; amended by Ord. 109-24, File No. 240281, App. 6/6/2024, Eff. 7/7/2024)
At the conclusion of the pilot program the Department of Disability and Aging Services shall provide the Board of Supervisors with a report on the effectiveness of consumer education and counseling on curbing predatory lending practices. The report shall include:
A. A summary of local consumer loan practices which the Department considers to represent predatory and harmful to San Francisco consumers.
B. A survey of the neighborhoods where predatory or potentially predatory practices are most prevalent, including information on targeted loan advertising in those neighborhoods.
C. A survey of the consumers subjected to predatory practices, including data on neighborhood, age, race, income, and other factors common to the sub-prime loan applicant and borrower pool in San Francisco.
D. A report on additional steps that the City can take to curb predatory lending practices in San Francisco.
(Added by Ord. 50-02, File No. 012004, App. 4/26/2002; amended by Ord. 109-24, File No. 240281, App. 6/6/2024, Eff. 7/7/2024)