Darth --
Thank you for getting back to us. You raise a number of good ideas. Let's look at them.
>>>1) Biggest "quick fix" for the immediate problem. National Mortgage Reform. Hint.... Take a look at Michigans' Procedure. It's procedures have allowed both consumer and lender to coexist peacefully, and has all but eliminated the "loan to own" lending in that state.
Sure. I'll be happy to take a look.
>>>2) Rather than trying to keep the "rats" from Multiplying by penning them in, do it by making them compete for the loans with more lenders. Translation.....trash HOEPA we had a small problem before the law came into effect, we have a large problem now.
I'd be elated to trash HOEPA -- thus the suggestions in my article. As to more competition, I'm not sure that's workable given that many predatory loans are made to people who are unlikely to qualify for even sub-prime financing.
>>>3) Further reduce the predatory lending consumer base through education. HUD and many high profile consumer advocacy groups decry the very problem they helped to create. HUD fails on two fronts regulation, and education. The consumers' groups efforts to "educate" those they wish to protect have failed miserably. Right now, their most effective tool would be a mirror, because an educated, and informed consumer base would not buy this product. They would be more inclined to do business with someone like me.
Well, if not HUD and consumer groups, then who? Moreover, I have more faith in mechanical limitations that would prevent predatory loans as opposed to educational efforts.
>>>Subprime clients are not stupid, just pooly informed about their options.
Agreed.
>>>The burden of educating the consumer lies at the feet of the community. ie HUD,Consumer Groups, Media. So far as I am concerned, HUD is only decrying its own failures. This goes double for groups such as "Consumers Union" If people don't buy their stuff, tough, then distribute it in the community for free if you are really that concerned.
I'll disagree with this -- the media has any number of articles and stories regarding predatory lending and it doesn't seem to help.
>>>4) Make the MBA and NAMB more responsible for the acts of their bretheren,and in turn, make membership to either association a primary indicator of a lenders' ethical status. If they belong to either association, that is a good sign. If not, be forewarned. We know what is B.S. and what is a real problem when one of our own is talking. We can weed out the bad apples faster than HUD could ever dream of, we , as associations have to have the guts to cuts out the "rats" from our associations so consumers can be given a readily identifiable "heads up" as to the ethical status of a lender.
I think it is very difficult for associations in any field to enact forceful penalties. We would need to carefully define "ethical" behavior and we would have to be certain that the purpose of such programs was not merely to eliminate pesky competitors. Perhaps state regulators could do the job, but they too would need to clearly define what is or is not a "predatory" loan. The standards suggested in my article, or other standard, could be used to form such a definition.
>>>I appreciate your earnest reponse to my last posting, however, there was one point that bothered me a bit. You mentioned that maybe some people should not own a home anyway. This is the same sentiment that was vioced by both Rep. Kennedys', and Sen. Reigles' offices when we were fighting the onset of HOEPA. I was as lost for a response then. Not anymore. To me, this is a response of someone who has never had a good person beset by a set of unfortunate circumstances, in their own office begging you to save their familys' home. Or, someone who has stumbled along in life because no on took the time to tell them that paying intermittantly was still a bad thing even though they eventually paid the debt in full. What about the newly widowed mother who needs a chance to consolidate the familys' debts and catch up on the house payment? Or the parents of a child accused of a crime that he did not commit, who have spent every last dime of their income, savings, and retirement,defending him and their only recourse is to pull equity from their home at whatever the cost. (The son was later acquitted in a short jury trial, and the prosecutor was reprimanded.)
These are all actual cases of mine. I ask you to come in my office, personally face these people, and tell them and their children that they don't deserve to own a home. Blanket pontifications are easy if you don't have to deal with the real people who are left out in the cold.
Loans with steep rates are not necessarily predatory loans, they may well be nothing more than loans which properly reflect credit and value issues. I have no objection to high rates, I have huge objections to loans which are constructed in such a way that they lead to "loan to own" arrangements or terms which are (or should be) unconscionable.
There is a distinction to be made between loans with tough terms and high rates and predatory financing. The former are appropriate for certain situations, the latter are not.
All the best.
Peter G. Miller
OurBroker(r)
http://www.ourbroker.com
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