Talk:Predatory lending/Archives/2012

Proposed Solution to the POV Concerns

What this article seems not to recognize is that there is a vibrant debate going on right now about what constitutes "predatory lending." There is not presently a universally (or even widely) accepted meaning of the term. (Most would agree that it refers to unfair or abusive practices, but that does not supply much content.) Mirroring the larger public policy debate within this talk page does not help much, either.

I propose that the article text state candidly that there is disagreement about what the term "predatory lending" means. It should then discuss various definitions that have been proposed by prominent groups on the subject, including by representives of the lending industry, consumer advocates, and regulators.

Most likely, a person who comes to this page will have seen the term "predatory lending" somewhere and will want to know what the term means. The best service this article can provide is to explain that different people use the term to refer to different things. If you see the term "predatory lending" on the AARP's web site, for example, the term will be used to refer to something different than if you saw it on the web site of the Mortgage Bankers Association of America. This is because the AARP and the MBAA have significantly different views about what constitutes "predatory lending." Rather than try to resolve which of these organizations is "correct"--itself a fool's errand, since the term "predatory lending" has not acheived a sufficiently widely accepted meaning to have any particular defintion be objectively "correct"--the article should explain the contrary positions of these and other groups involved in the predatory lending debate. --

Definition of Predatory Lending

"In the strictest and legal sense, predatory lending refers to secured loans such as home or car loans which are made by the lender with the intention that the borrower will not repay the loan, allowing the lender to seize the car or home and sell it for a profit." I'm not sure what the authority is for this, but I'm quite sure that there is no precise definition of "predatory lending." In particular, there is no precise "legal" definition of predatory lending.

Additionally, it is misleading to say that consumer groups consider refund-anticipation loans (RALs), payday loans, and credit card loans to be inherently predatory. Consumer groups argue that such loans are often offered by lenders on predatory terms--but I know of no group which has suggested that any are per se predatory.

To which someone responds: I diasgree, the http://www.ots.treas.gov/docs/7/77335.html office of thrift supervision and office of comptroller of the currency use the term to mean forclosing for profit.

And I say: Exactly my point. The joint advisory ruling identifies making a loan that the lender does not expect the borrower to repay to be, generally, an example of a "predatory" lending practice. However, it does not suggest that this is the "definition" of predatory lending--only a specific example of it. I don't think the article should suggest that an example of a practice considered predatory is equivalent of the "legal" definition of the term.

---

So I think that you're probably right that predatory lending as it is typically used is not a legal term. ACORN and other groups have passed laws in CA, MD, IL, and NC, but I don't think there is any real federal legislation (Republicans keep trying to pass token laws, Democrats keep trying to pass punitive one, and in the end they do nothing).

I would be hard pressed however, to find a community or consumer group that did not consider RALs to be a good example of predatory lending. If you're arguing that RALs are not predatory lending, you're probably arguing that predatory lending does not exist.

LegCircus 02:28, 9 November 2005 (UTC)

On the contrary, given that lenders throughout the United States can be and often are prosecuted by the feds for predatory lending practices there certainly is a "legal" definition for predatory lending. This is not to say that the "legal" definition coincides with the common use.

Noff72 06:57, 9 January 2007 (UTC)

There are a variety of practices which are considered "predatory lending" which are specifically illegal, generally various sorts of frauds, like mis-stating interest rates, or charging the customer fees which aren't in the contract; and those are what the federal prosecutors are charging. AFAIK, there is no federal "predatory lending" law. If you can provide a citation otherwise, however, we should include it in the article. Argyriou (talk) 18:30, 9 January 2007 (UTC)

No, "predatory lending" is not a legal term, but a policy term. It is inherently judgmental, but so would be any article on a kind of abuse or crime. Does an article on murder have to be nautral between murderers and their victims or their survivors? The important thing is whether we can identify a pattern that is sufficiently coherent to be identified and discussed as a distinct phenomenon. What we actually have are sseveral such patterns, although they tend to be interconnected, to have similar causes, to involve similar parties, and to have similar remedies. We should try to improve the article to bring out these commonalities. --Jon Roland 15:23, 17 March 2007 (UTC)

This article fails to mention that while there is no universal definition, this is defined at the local and possibly state level. In particular, I like http://www.bankrate.com/brm/news/mtg/20010510b.asp. I don't have time to do a rewrite, but wanted to include this link. We should also mention that having an accepted legal definition would probably benefit everyone on all sides of this issue.—Preceding unsigned comment added by Bvbellomo (talk • contribs) 13:32, 9 August 2007

That article only really talks about Philadelphia's law, which appears to be crapbadly drafted. I doubt that there are terribly many local laws, except those covering loans subsidised by localities, as state law would generally pre-empt local law. Argyriou (talk) 06:48, 10 August 2007 (UTC)

There are actually a number of local laws. There's a very entertaining story where a person trying to get a mortgage had to ask the mayor of another town to confirm that he lived in a different town because the mayor's town had a ludicrously anti-mortgage "predatory lending" law that made banks want to avoid that city entirely. The article is missing the extensive research showing the damage that strict "predatory lending" laws can do. My colleague, Larry Lindsay wrote a good WSJ article on this last week, and I have previously written on the subject. THF 12:15, 10 August 2007 (UTC)

Merge in some pages?

Hello. I've run across a couple of pages: BlueHippo Funding, Upfront Rewards. I'll probably find some more if I go looking for them. I'm dubious about them as articles in themselves (although the BlueHippo one is decently written and has some good information) but instead of proposing them for deletion I went looking for someplace to merge them into. My first thought was Easy credit ripoff (from the old Good Times TV show) but that page doesn't exist (though I'll probably create it, and some others e.g. Easy credit, as redirects here). This page might be the best place for the material, but I also don't want to invite every aggrieved consumer to add their stories here. Any suggestions? Ewlyahoocom 18:04, 7 March 2006 (UTC)

The notability of Blue Hippo goes beyond the usury/predatory lending issue. E.g. the article currently notes that the FTC says they only shipped one computer while collecting $15 million from customers. That's either a groundbreaking new low for the industry, or simply a different industry, IMO. Here is some USB/Upfront Rewards and TronixCountry content. --Elvey (talk) 18:35, 17 November 2009 (UTC)

Semiprotect?

Why/how was this semiprotected? There was not a lot of vandalism. An obvious POV website was added to "External Links" by user "Danny" who then semiprotected this?

Actually Danny removed the website, then semiprotected, probably to prevent it from being added again. · Katefan0^(scribble)/poll 23:07, 31 March 2006 (UTC)

Oh yeah, I saw that wrong. Still, does a single spam justify a semi? Mateo LeFou 20:48, 8 April 2006 (UTC)

Lead Paragraph

The lead paragraph needs a lot of work, preferably from someone without an agenda. We seem to have some activists and predatory lending apologists making lots of edits to suit their POV. And the first paragraph is just poorly written. I'll do what I can to clean it up. Dubc0724 15:05, 21 July 2006 (UTC)

I agree with the above poster. Ridiculous how this article is so obviously slanted in favor of the "victims" of predatory lending. I personally believe that the only "victims" of lending are those who are too ignorant and lazy to find out what they are agreeing to, and there is no reason to coddle them by implying that it's the fault of the CREDITOR if they can't pay off all the loans they've taken out and wasted on luxury items and non-necessities. Smith Jones 02:25, 16 September 2006 (UTC)

As far as the POV is concerned, I think it is just fine the way it is. The term "predatory lending" is used quite often in governmental language and it is derogatory in nature, which when used to describe a practice or business enterprise, it would appear to have a slant or angle. Most recently, politicians have taken notice to a plague that most military members have known about for quite some time. Our service chiefs have testified on Capitol Hill about the location and tactics used by companies that describe themselves as "payday loans" but in truth are quite predatory. The items of their argument that caught my attention were the physical locations of the payday loan vendors. In military towns, sometimes up to 60% of the vendors are located within 5 miles of the military base, a tactic that the vendors hope to take advantage of a combination of A) low income families of military personnel, B) relative youth and inexperience of the military member or his/her dependents and C) the fact that military members will/can have their wages garnished without a court order in order to make up for missed payments, without regard to their financial status. In my POV, the article itself isn't slanted, its descriptive. You can't describe anything with a negative connotation without the appearance of a negative slant.

I have tried to improve on this opening to shift the focus from unfavorable lending terms to practices that can be more clearly seen as abusive or fraudulent, including violations of terms by lenders in ways that make it difficult for borrowers to defend against. I have also introduced a category of cases that make the term more meaningful. Such practices have become sufficiently common to identify them as a problem requiring legal reforms. Obviously, on such a topic there is going to be a POV, but does neutrality require us to be balanced between the honest and the fraudulent? --Jon Roland 15:14, 17 March 2007 (UTC)

Neutrality

Does anyone currently believe that this article fails to conform to a neutral point of view? Jerimee 23:18, 23 November 2006 (UTC)

"America's Growing Fringe Economy" reference

The "America's Growing Fringe Economy" article in Dollars & Sense magazine is not a very good reference, because the article is only partially about predatory lending, however defined. Quite a lot of the article is about the expenses of moving money when one does not have a bank account, which is a social problem, but is not the same as predatory lending. Argyriou (talk) 20:51, 5 December 2006 (UTC)

Fair enough. I just replaced it with an older, but more appropriate article (called "Predatory Lending"!).Notmyrealname 21:13, 5 December 2006 (UTC)

Photo of a pawn shop from a French movie?

Just curious if anyone sees the relation for Predatory Lending? If there is one, could it be spelled out for slower people like myself? CodeCarpenter 19:39, 23 April 2007 (UTC)

Lenders Paint Colors...Warning coloration?

I realise that this qualifies as original research, but perhaps it will one day merit some investigation. Here goes. IN nature, often, poisonous animals are brightly colored to indicate that the frog, snake, etc. are perilous and to any potential predators to stay well away. Well, has anyone noticed that these payday loan places and the like are frequently painted in shocking red and yellow? Could it be intentionally so that these predatory lending centers are painted in a way that is analogous to toxic animal warning colorations? I know it sounds insane, and I usually don't post such nonsense, but i am pretty sure that I have heard others speak to this observation. --Frenkmelk talk 00:25, 28 August 2007 (UTC)

No More Usury laws??

I fount this little gem in a Bernanke speech: Also, the preemption of usury laws on home loans created more scope for risk-based pricing of mortgages. What is he talking about specifically and should it be in here? The 1994 section 32 of the Truth in Lending Act, entitled the Home Ownership and Equity Protection Act of 1994??. This Harvard predatory lending article] seems to apply. This article is even more clear: And some economists said usury caps were a waste of time because the Truth in Lending Act guaranteed that issuers would disclose rates, Farley said. They believed the required disclosures would direct consumers away from high charges. As a result, there is no federal cap on rates. "The federal government only requires that whatever rates, fees or terms are set by issuers be disclosed to the consumer in accordance with the Truth in Lending Act," said Farley." Anyway this seems to contradict your article at least at one point and generally is not clear. Carol Moore 02:48, 1 October 2008 (UTC)Carolmooredc

Changes to lead paragraph

Per the okay from the editor, I started a new section that continues the discussion from the above 2006/7 Talk:Predatory lending/Archives/2012#Lead Paragraph so the new comments and suggestions wouldn't get buried in an older discussion in the middle of the page. Flowanda | Talk 18:58, 17 October 2008 (UTC)

It is the duty of the lender to exercise due dilligence not the borrower. Of course many people have a tendency to lie or cheat if it is to their advantage, however, the financial institution lending other people's funds has the obligation to make as sure as it can to safeguard these funds. Predatory borrowing is IMO a misleading term. I suggest it's politically charged and definitely not a NPOV. Moreover, if you check footnote 14 and scroll down a bit you will find the following quote by Cowen:

"I thank Barry for his kind words in the post but I think his criticism is a simple misunderstanding. I think the lenders are greatly at fault, as does anyone else with a fair mind. Pointing out additional faults elsewhere doesn't (and should not be understand as) subtracting from those faults. More generally, the point of my column was to point out some new information about a bunch of different economic issues, not to provide a comprehensive survey of who was at fault in the mortgage crisis."

To devote almost one third of the entry to "predatory borrowing" - especially in the light of the preceding quote - is IMO in itself not a NPOV.

I haven't changed anything but I suggest changes should be made to the entry.Gatorinvancouver (talk) 17:35, 13 October 2008 (UTC)

Added Oct 17th, 2008: There is also a rule, called "know your client" (at least in Canada) obliging the lender to find out as much as possible about the borrower's circumstances, which obviously includes the ability to repay a loan. Gatorinvancouver (talk) 22:20, 17 October 2008 (UTC)

Furthermore, consider this quote form the NYT of Oct 12, 2008, "White House Overhauling Rescue Plan":

"The bonds for a single pool of mortgages are divided into more than a dozen “tranches,” or slices, which have different seniority, different credit ratings and different rules for being paid off. The performance of the underlying mortgages varies greatly from one pool to another, even if both pools are made up of seemingly similar loans."

It's reasonable to assume that this 'obfuscation' was deliberate on the part of the lenders possibly to deceive both borrowers and institutions buying the toxic debt from them. To sum it up: I believe it's reasonable to look at predatory lending as a major cause of the credit crisis. (Consider also that Countrywide Financial, for example, actually made money from foreclosures and thus had an incentive to grant bad loans.) To repeat, "predatory borrowing" shouldn't get more than mention in passing. The causes are the artificially low interest rates maintained by Greenspan, fuelling the real estate speculation and the greed built into maximising profits.Gatorinvancouver (talk) 17:57, 13 October 2008 (UTC)

The "predatory borrowing" section may have ended up here because of how the term was coined, not the activities it's related to.

I added a source to the article, and the term seems to have enough use in published sources to be spun out to a new article or be moved to a more appropriate article, such Mortgage fraud. Flowanda | Talk 20:42, 17 October 2008 (UTC)

And here's a Portfolio finance blog entry discussing the Cowan comments mentioned above by Gatorinvancouver: http://www.portfolio.com/views/blogs/market-movers/2008/01/14/predatory-borrowers . I didn't add it to the article because I didn't want to edit the existing content too much while it's under discussion. Flowanda | Talk 21:00, 17 October 2008 (UTC)

From the preceding source: "But frankly it's silly for Ritholtz to delude himself that there was no fraud at all on the side of the borrowers."

I doubt very much anybody says that.

The whole debate reminds me of many like ones, e.g. about the epidemic of obesity. Of course sitting in front of a computer all day and not doing any exercise is a contributing factor. The overwhelming factor according to health professionals is junk food. But one can go on and on to deflect attention from the main factors.

Analysing the present credit crisis surely suggests concentrating on main factors and to mention the less important ones in passing. Everybody knows that humans have a tendency to deceive.

Gatorinvancouver (talk) 22:45, 17 October 2008 (UTC)

Grace: I am an Ex-Loan Officer,out of work because of the Preditory Lending that was allowed in the past 5 years.I am not an Enlish major or a Attorney at Law but I am aware of the "Set-up" Perdatory Lending practices that set-up most Americans and it had nothing to do with the fact that the client should have known what they were singing or not. Bottom line is, the consumer was "Set-up". "Set-up" to fail in the first place and that right there should be grouds for there to be a class action law suit on all the lenders who got greedy and loosened up all the guildline like "loose Lucy" allowing everybody to purchase a home that would otherwise not qualify allowing them to get these 2 and 3 year Loans at between a 500-580 FICO score, knowing they were going to tighten up the guildlines like they did, what was that all about? Who was incharge of doing that? All they had to do is allow these home owners that purchased these properties to be able to refinace right back into these same loans that lese banks allowed them to get into in the first place but couldn't because of the stricked guildline that they reverted back to. That is the biggest act of fraud and Predatory Lending act I've ever seen in the history of Lending and there should be a "HUG Class Action Law Suit" and the banks should be heald accountable. The builders sold their homes at top dollars, big wigs builders and Bankers making money hand over fist, then all of a sudden tightening the guildlines like a freight train stopping on a dime for NO apparent reason. "That my fellow Americans was the biggest Fraudulant move", I've ever seen anything like it and it is a major case of "Preditory Lending" and there should be a lot of people accountable for everything that was done to the consumer to set them up the way they did. gain, it was a set-up and there should be a HUG Class Action Law suit for the above matters. My take on it is that the rich just unloaded prime Real Estate at top dollar and then bought it back after at pennies on the dollar. There are people who know exactly what they are doing to the American people, so they keep us so stressed out and at the same times always trying to keep up with the Jones's and therefore keeping us blinded and incontrol so they can continue to run a muck in this country and keep us in fear and fighting against one another. Wake-up America and see what happening...Stop turning a blind eye to it because eventually we will all pay for it, one way or another and we must understand that we are all in this together.You can contact me at lifestyleloansatyahoo—Preceding unsigned comment added by 98.151.17.194 (talk) 06:58, 17 March 2009 (UTC)

It seems that I'm the only one who takes an interest in this topic and I'll rewrite the entry soon unless others have something to say about this topic.

Here is another example why the whole idea of "predatory borrowing" is corporate, or just right wing, propaganda (which is not to say that humans don't have a tendency to cheat, even monkeys do it, as I indicated above).

Predatory lending or predatory borrowing?

“Mr. Mozilo referred to Countrywide loan products as “toxic” and “poison,” S.E.C. officials said that he had misled investors about growing risks in the company’s lending practices from 2005 through 2007. During this time he also generated $140 million in profits by selling stock in the company, the S.E.C. said.” Mozilo wrote that “we have no way, with any reasonable certainty, to assess the real risk of holding these loans on our balance sheet.” Yet Moody’s didn’t warn the public by downgrading Countrywide’s securities until the summer of 2007. Meanwhile, this supposed watchdog for investors, which, like other credit-rating agencies, is paid by the very companies it monitors, took its own tranche of the bubble. Moody’s profit margins even surpassed Exxon’s.

http://www.nytimes.com/2009/06/05/business/05insider.html?pagewanted=all

Now if I only knew how to renumber the footnotes after I insert something. Are they renumbered automatically or do I have to do this manually for the rest of the piece?

Gatorinvancouver (talk) 13:08, 22 June 2009 (UTC)