Wednesday, January 23, 2008

Loan Gouging

My print column on so-called "predatory lending" is up and can be found here.

I'd be interested to hear from anyone who has taken out one of these "payday" or "Title" loans. Or from anyone in the loan biz.

Here's one response, I thought was pretty interesting:

Dear Mr. Spencer;

I read your article and was so pleased to have another point of view in print. As someone who has been in the mortgage business for 22 years, it has come to the point where many mortgage brokers, including myself, and lenders have left the residential mortgage business.

Why bother to try to service the markets that our big brother government insisted we serve when we are constantly faced with freebee lawyers filing suit against us for predatory lending.

We are accused of predatory lending when an adult makes an informed decision to accept a loan program that will enable that person to acquire a home when conventional lending sources such as banks refuse to offer a mortgage due to less than perfect credit or undocumented income. It then becomes the responsibility of the homeowner to MAKE THE MONTHLY MORTGAGE PAYMENTS. When the homeowner defaults, the freebee lawyers state that the homeowner is ignorant to the loans terms and should not have to pay the higher than prevailing interest rate.

Pardon me, but what ever happened to the principle of risk and reward ? Why should an adult not be responsible for his or her actions? It seems to me that government enjoys making these people wards of the state. After all, how else will the politicians ensure where their next vote is coming from? The politicians and lawyers have injured the industry so badly that unless one qualifies for a conventional mortgage the options available become so cumbersome that real estate investment is dying a very fast death.

Let's get back to the times when only those that could afford a home were getting mortgages. Homeownership, is for those that can pay the monthly bill. The convoluted political sentiments that caused this mess need to be addressed not the industry.

There is nothing wrong with the mortgage industry, only the bleeding heart politicians that are only good at ruining everything they legislate. Perhaps they should investigate the foreclosures on VA insured homes. Historically, VA mortgages default more than any other loan. Why not protect the veteran against insured loans that are sure recipies for financial ruin.

Frank J. Melfi III

NOTE: He's not the same Frank J. who runs IMAO.

8 Comments:

Anonymous randal said...

There is nothing wrong with the mortgage industry, only the bleeding heart politicians that are only good at ruining everything they legislate.

Yep, once again we see the very real cost of legislating touchy-feely, spread the dream Liberalism.


Killer letter, Mr. Melfi! Please send it on to newspapers for print. We need more honest assesments like yours out there of the cause of the problem.

January 23, 2008 at 3:17 PM 
Anonymous e said...

Now that would be a good editorial!

These "predatory Loaners" are no different that a "low interest credit card" that you are late on a payment and your rate jacks up to 24%. They are no different than Rent-a-Center charging people to "rent to own" a big screen TV that they can't afford normally but can make an attractive weekly payment. They are no different that the "U job, U credit" car dealerships selling used cars to people who can't get a conventional loan, with an electronic device attached to the ignition to disable it if the payments aren't made.

It all boils down to the fact that people want to live outside their means and then they don't want to be responsible for the decisions that they made. Both the lenders and the lawyer, who is sticking up for these people who are living outside their means, have identified this segment of the population and both are trying to make a dollar off them. He just wanted a little free advertisement for his budding enterprise from Gil Spencer!

January 23, 2008 at 9:40 PM 
Blogger Spencerblog said...

And he got it!

January 23, 2008 at 10:31 PM 
Blogger David Diano said...

This comment has been removed by the author.

January 24, 2008 at 2:13 AM 
Anonymous r said...

Leave it to Dave to advocate Socialism no matter in what form it comes. Sorry, D, but not everyone should be granted mortgages equally and get to pay the same rate regardless of their credit history. It is exactly Lib attitudes like yours that have caused this fiasco. You are the problem.

January 24, 2008 at 3:01 AM 
Anonymous e said...

Yes it's buyer beware when you can't pay your electric bill and you borrow money from a guy with a mullet, wearing a "git r' done" t-shirt, a big fat gold chain and driving an Escalade with 22" rims at Ol' Billy Bob's Title Loans. Especially if you have to put the title of your clunker down as security. That is not a normal way of borrowing money.

If you need to borrow money to pay your electric bill then you need to re-evaluate how you are spending your money. You need to turn off the cell phone, sell the clunker,sell the playstation and stop ordering take-out.

Ol' Billy Bob didn't get his Escalade by being a charitable organization.

January 24, 2008 at 4:04 AM 
Anonymous randal said...

Here's something I wrote back when this mess was first unfolding:


I can summate what happened in simpler language…

Filthy Socialist Liberals weeped that ‘not everyone was enjoying the American Dream’ (As if home ownership were some “right” afforded by the Constitution. It’s not.) and set about forcing creditors to extend mortgages to folks who had no business having them. They did this by employing their usual Modern Liberal methods of bullying and pressuring and with their favored implications of racism and classism to force creditors to extend credit to the lower class against their better judgment.

But Libs didn’t like the way lenders went about it so they began labeling the creditors that they had bullied into extending these risky loans as “predatory lenders” for their having charged these risky borrowers more than they charge the less risky. As if everyone should enjoy the very same interest rates, regardless of their credit history. Again with their Socialism and dishonest race and class accusations.

And then, just as predicted, these “subprime borrowers” could not repay the credit they should not have been extended in the first place and they started defaulting on the mortgages and losing the houses they couldn’t afford and shouldn’t have had. The Libs stepped up and once again played their finger pointing games casting blame for this mess not at the deadbeats but at the creditors while hoping everyone forgot that it was the Libs themselves who created it.

The ripple effect of this misguided, touchy-feely Socialist Liberalism policy failure is reaching. Just as with every misguided Liberal scheme, they ended up hurting not only those who they were trying to help but everyone else in the process. But Libs like to spread the pain as much as they like to spread the wealth.

And you can bet that in the not too distant future, once everyone has long forgotten the Lib forces that created this housing market crash, they will claim that this all was the result of Bush’s poor economic policies. Lying Libs are like that. They love shifting blame for their own failures. It’s a talent.

As we have seen, such emotion-based Liberalism policy making that puts emotion above all else while casting a blind eye to realities –in this case economic realities- is harmful to our nation. There is no place for such touchy-feely Libism in such important economic matters any more than there is in the crafting of war policy.

January 24, 2008 at 12:58 PM 
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