Recent headlines about predatory loan practices and the fallout of the subprime mortgage market have drawn attention to the impact of mortgage defaults and foreclosures on the housing market and the economy.

But they often fail to highlight the real consequences — the displacement of working families who are forced to abandon their dreams of homeownership and financial stability, and the subsequent weakening of our communities. San Francisco is no exception, and that’s why the City must begin to develop comprehensive policies that protect consumers and hold lending institutions accountable.

The Center for Responsible Lending projects the lifetime foreclosure rate for the loans originated in 2006 for San Francisco and San Mateo to exceed 16 percent, compared to only 3 percent for loans originated during the period between 1998 and 2001. This percentage is only expected to grow worse, so we must act now to curb the rate of foreclosures and alleviate future losses for families.

Predatory home lending refers to a variety of practices, such as charging excessive interest rates or fees, equity stripping, and steering consumers into inappropriate or unaffordable loans. Nationally, homeowners who fall prey to these practices are 15 times more likely to face foreclosure than those with lower-cost loans.

Predatory lenders typically target those that are most vulnerable — low- to moderate-income homebuyers, people of color, limited English speakers, seniors and homebuyers with weak credit. Loss of home assets through default, fraud, or foreclosure strips families of the financial gains they have worked so hard to obtain, and their most valuable asset — their homes and ultimately their ability to maintain stable housing. This has an adverse impact on our families, our neighborhoods, and our city.

In San Francisco, predatory lending practices are disproportionately concentrated in the southeastern section of the city — Bayview, Visitacion Valley, Excelsior, Crocker Amazon, Outer Mission and Ocean View. In these six adjacent neighborhoods, more than 25 percent of loans are high-cost, whereas no other neighborhood in The City has more than 17 percent high-cost loans. These areas are also home to some of The City’s most vulnerable residents — the typical homebuyer within these neighborhoods has a 15 percent lower income than the typical San Francisco homebuyer, and 78 percent of homebuyers in these areas are people of color.

To address this issue, the Assessor-Recorder’s Office, along with the Mayor’s Office of Housing, Mission Economic Development Agency and others launched an initiative called “Don’t Borrow Trouble.” The goal of this initiative is to provide education and counseling services to residents living in San Francisco’s low-income neighborhoods about the dangers of predatory lending, and helping them find ways out of these situations.

Educating consumers is a start; however, we need to do more. We should focus on developing policy initiatives that change the environment in which predatory practices are allowed to exist, and we should mandate greater accountability for lenders. We need to have a long-term plan that does not put the onus entirely on the homebuyer to avoid deceptive loan practices, but rather enforces measures that prevent predatory lenders from preying on homebuyers from the onset.

It is imperative that The City begin to do all that it can to ensure that families are able to preserve their most significant asset — their home. Homeownership is the foundation of personal financial independence as well as community stability. It’s time for San Francisco to step up to the plate to protect our most vulnerable residents and enable them to fulfill and sustain their dreams of homeownership.

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