I’m sick of the term “predatory lending”
It’s rapidly becoming one of my biggest pet peeves, angling for a second place finish close on the heels of hair in the shower drain. The term “predatory lender”, and the closely related “predatory lending institutions”, makes for a very interesting distortion of reality. By attempting to fix the blame for the subprime mortgage crisis solely on the banks who were lending money, the people who use these terms ignore part of the overall problem.
And if we ignore parts of the problem, we will never get it solved.
From Yahoo on Monday, a piece entitled “Racial Predatory Lending Fueled US Housing Crisis”:
CHICAGO (Reuters) – Predatory lending aimed at racially segregated minority neighborhoods led to mass foreclosures that fueled the U.S. housing crisis, according to a new study published in the American Sociological Review.
Predatory lending typically refers to loans that carry unreasonable fees, interest rates and payment requirements.
Come again?
That opening really hits the nail on the head, doesn’t it?
IF the problem is “unreasonable fees, interest rates and payment requirements”, are we really talking about the lender? Aren’t we instead more concerned with the debt collector?
No one had any problems with the lenders when the money was coming their way at ridiculously low interest rates, credit history be damned. The banks were throwing money at people and people were snatching it up by the handfuls.
The problem, and the “outrage”, didn’t spring up until the bill came due and they had to start paying that money back.
The proper term should be “predatory collections“.
And that’s something I completely understand. The people who are collecting these debts have no scruples. They will lie to you. They will insult you. They will harass you. They will pull underhanded tricks. Anything to get more of your money. Dealing with a credit card company can make you wish you’d borrowed money from the mafia.
But we’ll never fix this as long as we ignore the real problem and refuse to even call it by its real title.
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I agree, let’s label this correctly!
Wait….
So, wouldn’t it be more appropriate to call it “Suckers’ Lament” or maybe “Bonehead Borrowing”?
Those of us living in the real world realize that big corporations like Ford, Whole Foods, IBM, Shell and Bank of America only exist to make money. They aren’t there to lend us a helping hand, make our lives easier or to be our new best friends. Their stockholders demand a return on investment; their employees want to be paid and their debtors want to be repaid.
That is why we shop around, read labels and compare prices. We know that A is rarely equal to B and we want the most for our hard-earned dollar, so we weigh our options and choose the one that best fits our needs and our budgets.
People who don’t bother are easily categorized as either rich enough not to care or too stupid to pour sand from a boot when the instructions are printed on the heel.
The people who signed up for flexible rate mortgages they didn’t understand; for big balloon payments whose existence they ignored and for loans they weren’t sure they could afford, all fit into that second category.
I know that hunting for scapegoats is a national past-time and the lending institutions were easy targets since they have deep pockets.
Debt collectors are like meter maids in being universally despised (often for good reason) and are another convenient target.
Pointing the finger at either of the two and claiming that they are sole reason for the mortgage meltdown is just ridiculous.
Do any of these ring a bell?
“Don’t take any wooden nickles.”
“Don’t buy a pig in a poke.”
“If it sounds too good to be true, then it is.”
“There is no such thing as a free lunch.”
“Look before you leap.”
And my favorite, “There is a sucker born every minute.”
The REAL target for our scorn should be the people who let greed overcome common sense.
Wanna bet that the idiots in the world who fall for Nigerian Scams are a subset of those who are the supposed “victims” of “Predatory Lending”?
It’s just one more way for people to avoid taking responsibility for their own actions and decisions. When my husband and I were shopping for our first home, we got pre-approved for a mortgage. The amount we were approved to borrow was much higher than we could afford. I find it hard to believe we might be the only ones who realize this. Just because a bank tells you you can get a mortgage for $350K doesn’t mean you can afford the mortgage payments if you actually buy a house for that amount! Seriously!? Do you really need someone to tell you this?
I bought a condo.. it was a nice condo in a gated community and was nice and affordable. Then the real estate market took a dive. My condo was soon worth less than 1/3 of what I payed. Neighbors started walking away, the ghetto moved in and all of a sudden my nice quiet little condo community had cops called all hours of the day, cars being broken into, little gangster rapper wannabees roaming around. The board was powerless, selling was out of the question and the bank refused to talk to us because we were making payments and had outstanding credit…… So I took my outstanding credit and savings account and went and bought one of those nice big houses in a quiet neigborhood with a 3 car garage, 4 bedrooms and a stainless steel kitchen, for alot less than what I payed for my little condo…… and told the bank to stuff that condo wher the sun does not shine. They refused to talk to me about property values, loan terms, interest rates etc… they took my tax money, paid out bonuses and are sitting on the lump of it and refused to talk….. well now they want to talk, and they want to talk real bad … 10 or more calls a day, certified letters etc etc etc…. and they cant touch me…. my entire mortgage was for the property, no HELOC loans and all they can do is foreclose on the condo….. Call me what you will but when you wake up to “kill a cop” rap and all the homies partying right next door, drinking 40’s and smoking weed (19 year old drop out with a medical maryjane card and no job) …. quality of life and a secure environment out weigh a few years of bad credit.
@ JohnM
You didn’t blame the banks for your problems though. You admitted that it was your own, personal choice to leave your condo.