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” [1]:
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.
[2]
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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Mike McGowan [5]
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