Defining Predatory Lending


D

Damage Control

Predatory lending is defined in various ways:

As defined by California Association of Mortgage Brokers ( CAMB ),
predatory lending is "placing consumers in loan products with
significantly worse terms and/or higher costs than loans offered to
similarly qualified consumers in the region for the primary purpose of
enriching the originator and with little or no regard for the costs to
the consumer."

FDIC chairman Donna Tanoue said "Not all loans are predatory - in
fact, most loans are not. What makes a loan predatory are certain
features that take advantage of naive or gullible consumers. These
include misleading and even fraudulent marketing representations,
excessive fees, exorbitant interest rates, prepayment penalties that
deter prepayment, balloon payments to conceal true cost and trigger
foreclosure, frequent refinancing with new fees, and abusive
collection practices."

Another definition states "Predatory lending can be defined as loans
placed through high-pressure sales tactics that force consumers to
accept real estate financing with high costs. Sub-prime mortgage
lending has boomed in recent years and consumers have been victimized
by excessive fees, too many ‘points', high interest, credit life
insurance, prepayment penalties, and the encouragement to refinance
too often so that lenders can get extra fees (flipping)."

However, "predatory lending," as defined by the Office of the
Comptroller of the Currency (the primary regulator of HSBC and its
subsidiary, Household International), means "making consumer loans
(loans for personal, family or household purposes) based predominantly
on the value of the collateral for the loan and the lender's reliance
on foreclosure of that collateral as the primary source of repayment,
without taking into account the borrower's ability to repay the loan
in accordance with its terms."

At Household - HSBC Watch we put forth a definition which shows the
actual damage done by Household and HSBC under the control of CEO
William F. Aldinger III :

"Predatory lending is the practice of imposing inflated interest
rates, fees, charges, and other onerous terms on home mortgage loans –
not because the imperatives of the market require them, but because
the lender has found a way to get away with them."

Florida began investigating Household, after Madie Bell Wilson, 89,
was evicted from her Miami home. She had taken out a $27,000
home-equity loan, thinking it was a home repair grant that did not
have to be paid back.

Wilson does not read or write well and said she had no idea she had
taken out a loan. The ultimate outcome, after state attorneys general
from many other states joined the investigation, was the now famous
$484 million (USD) nationwide predatory lending settlement paid by
Household International.
 
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S

Sharon

(e-mail address removed) (Damage Control) wrote in message
I would also add that although the settlement sounds so wonderful in
print, it breaks down to between $500-$1500 per person. A very
insignificant amount compared to the damage done.

If an ordinary person or small business were proven to have made
alterations to original loan documents, forged someone's signature
etc., they would be heavily fined and might also see some prison time.
Not so with predatory lenders. No REAL attempt is made to make the
punishment fit the crime, and they are allowed to continue on as
though nothing illegal has happened.

All this in the land of "by the people, for the people". Corporate
crime--alive and well and flourishing.

Sharon
 

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