Countless hard working, honest citizens have worked all their lives to pay for their homes as they have raised their families. Many have only the equity in their home to show for this lifetime of work. Often, these unscrupulous loan makers contact homeowners with offers to re-finance their home to pay off debt or make repairs or additions to homes.
The plague of predatory lending has reached epidemic proportions, particularly in urban areas. Leading economists, including Austin Peay State University economist Jerry Plummer, believe predatory lending is a primary factor in the increased rate of bankruptcies.
Promised low interest rates are used to get in the door. Then a sleight of hand here and there, plus lots of pressure and misleading statements, the borrower signs a loan with exurbanite rates, hidden fees and likely even a balloon payment. The end of this terrible game leaves the homeowner losing the family home to foreclosure or bankruptcy and everything a family has worked hard to earn.
Worse than a bad deal, predatory lenders could care less if the borrowers have the ability to pay back the loans. Honorable lenders do care and will turn down a loan when there is a probability of non-payment. Honorable lenders also generally have potential borrowers showing up at their place of business, where predatory lenders seek out their victims, often door to door in poor neighborhoods.
Government needs to step up to the plate and institute reforms to protect consumers. Critics of reform say that legitimate lenders are adversely affected by reform measures, but North Carolina has proved just the opposite by passing consumer oriented legislation that has not harmed honorable lenders in the banking industry. Georgia has also instituted reforms and other states, including Tennessee, are considering various reform measures.
In an effort by the federal government to aid victims of predatory lending, Rep. Jim Cooper, a Tennessee Democrat, helped secure grant funds to cover costs incurred by non-profits in setting up HomeSafe Nashville, an anti-predatory lending initiative where Fannie Mae, the Federal National Mortgage Association, has committed to purchase $2 million in predatory loans and make them good loans.
This provides a solution for some consumers entrapped by the predators but does not actually stop the predator. Congressman Cooper is to be commended though for asserting the need for the watchful eye of the federal government.
Go To Page: 1 2
| Here's the follow-up discussion on this article: | View all related messages |
For a complete listing of article comments, questions, and other discussions related to John Rutherford's The Democratic Party topic, please visit the Discussions page.