Economy and Predatory Lending

Basic principles of understanding economy include "give and take" or "what goes up must come down." In 2007 there have been accounts of inquiries about tax collecting with regard to property taxes, instances of mortgage companies going bankrupt, and people being forced into default by predatory lending.

Sometimes the impetus causing these problems are illegal, i.e., identity theft, confidentiality breaches, excessive application requests and unauthorized inquiries for driver's licenses or social security numbers, all characteristic of many predatory lending companies. Although predatory lending is legal in the U.S., it shouldn't be. Homeowners are a target for predatory lenders because if the amount is high enough, it will force the owner into bankruptcy. Although there isn't a debtor's prison in our country, a hurt reputation or record from the disfavor can make an honest worker collapse financially. It's about when one thing leads to another; the lender badgers the borrower and usually is very convincing in damaging the person's reputation as part of the intimidation. It looks like the borrower stole something, either interest rates top to unrelinquishable points or payment attempts are thwarted, forcing default. So then, when it's the norm for the homeowner to need a $4,000 furnace replaced, if you're renting the landlord has to, or re-shingle the roof, the simplest of loans many households once could rely on are now predatory. Ideologically, the modern day home equity.

How was it when our parents could save cash and walk into the car seller too and pay for the car? I recently took a walk around a big city anonymously and found that people can't buy a car without a credit check into their TransUnion, Equifax or Experian reports even if paying for the whole thing, no financing. Some loans excuse 21 percent interest rates to people who can't afford to pay for the entire car, now prices approaching $20,000 for a classic model car. And of course the new owner who can get the zero percent financing or under 5 percent rate, will be prone to a better and better deal until his pocket's empty.

As with the excessive foreclosure rates, people being forced into default either by underemployment, a newborn, other predators, or in many cases paradoxical charges by the lender. By the time the owner can get legal help and prove the damage, he has gone through court inquiries or banking commission circuits. Those people, as innocent as they may be, have stigma to a point of no rebound.

Lending in the case of cars and homes which are necessities, has leaned over to predatory practices. Their opportunities are so damaged that they either cannot find another job after the repercussions, have a record from bankruptcy, or are deemed trouble. For those who are frugal, the greed-driven predatory lender, it's shrugged off as "business."

The damage is this, our economy is in an over-spin. Houses are being foreclosed at excessive rates and large numbers from forced defaults with little or no recourse. Now the market flooded with these foreclosed homes aren't salable due to the new and higher interest rates, equating to two households homeless. Running out of rents? Because of the demand after people have been forced out of their homes, rent charges have escalated adding to the $300 per month the mortgage company originally wanted.

But who has the extra money to match the raising rates? Just as common are accounts of wages leveling off and people unable to keep up with the higher and higher rate demands. As for rented homes, landlords are dealing with the interest rates plus the escalation of nearly doubled property taxes in many cases where city residents depend on the repairs or upgrades needed to match zoning regulations. Home equity loans aren't feasible after the mortgage company cries default, and although it sounds like a quick fix, the lenders can't rebound from the lost business. The best solution for this is -- no predatory practices, it's unfair business for everybody.

Many businesses are not considered predatory lenders but use the practice in small ways due to the wide-spread acceptance of it. What goes up must come down, more favorably, we of the U.S. need to do something about the predatory lending. It should be stopped to prevent the wheel from spinning out of control soon.