Home equity lender Delta Funding Corp. last week agreed to settle a lawsuit undertaken by the New York State Attorney General that alleged predatory lending practices for $6 million. While Delta maintained it did not break any laws, Attorney General Eliot Spitzer called the agreement a "landmark" event and the beginning to what he predicted would be "widespread reform within [the] entire industry."
"We have now set the standard for other similar companies to conform to," Spitzer added.
The Attorney General accused Delta of targeting low-income minority borrowers with high-interest loans that put them at risk of losing their homes. The firm was alleged in the suit to have made over 1,000 high-interest, "illegal" home loans in Brooklyn and Queens over the past three years.
Under terms of the settlement, the Long Island-based home equity lender agreed to reduce monthly payments of certain borrowers and must offer its loan files for review for the next three years. Marty Cohen, a spokesman for Delta, was quoted last week as saying the firm thought the settlement was "fair," and "in the best interest of all constituencies."
"We believe we have not violated any laws or regulations," Cohen said, adding that Delta does not engage in predatory lending practices. - SK