Reuters Treasury official warns of "predatory borrowers" Thursday May 29, 6:23 pm ET WASHINGTON, May 29 (Reuters) - A senior U.S. Treasury official on Thursday called on Congress to pass laws making it harder for "predatory borrowers" to walk away from debts, but said laws aimed at curbing abusive lending may restrict credit availability. Assistant Treasury Secretary for Financial Institutions Wayne Abernathy said the problem of people who abuse U.S. bankruptcy laws to avoid paying bills is comparable to that of lenders who target unsophisticated borrowers for high cost loans that lead to property foreclosure, a process consumer advocates and others call predatory lending. "Among all the attention that has been paid to predatory lending, I am eager for attention to be turned as well to predatory borrowing," Abernathy told a conference of state bank supervisors in Asheville, North Carolina. Treasury issued a text of his speech in Washington. Abernathy said instances of abuse of the bankruptcy laws and exploitative lending are rare, but merit action by authorities. Legislation overhauling the nation's bankruptcy laws has come close to passage several times only to falter at the last minute. In 2002, the measure stalled over a provision aimed at preventing abortion clinic protesters from using bankruptcy to avoid paying fines. Sen. Orrin Hatch, a Utah Republican, has said he intends to bring the measure directly to the Senate for a vote in the near future. The House of Representative has passed bankruptcy reform without the abortion protest provision. U.S. bankruptcies reached an all-time high for the 12-month period ending March 13 on a surge in personal bankruptcy filings, a U.S. judicial agency said earlier this month. Mounting job losses were squeezing the finances of more Americans, experts said. Abernathy said in his speech that existing banking laws already prohibit practices that consumer advocates and others seek to prevent. New laws aimed at curbing predatory lending risk snuffing out legitimate products that expand credit to more borrowers, he said. "We need to facilitate the outreach and innovation that best meets the needs of consumers, all consumers. But so many of the anti-predatory lending proposals would undermine that progress," Abernathy said. Several states, including North Carolina, have passed laws aimed at combating abusive lending practices. Members of Congress have introduced legislation that would set national standards for home lending practices, but consumer advocates oppose the proposal, saying it weaken protections against unscrupulous lenders.
What crap. A predatory lender can operate in most states and screw as many people as they an, strip the equity out of their hoimes and ruin their credit in the process. Onlya couple of states have outlawed these abuses, so predatory lenders are free to go their happy ways in other states. "Predatory Borrowers" can get away with it only once every 10 years. CRA's diligently report ever misdeed a borrower commits - real or imagined - or (I believe) even thought of committing. If that were not the case, then why are there so many posts from people looking for help correcting erroneous derog information?
I know of a few people this describes. One charged up thoudands of $$$ for home renovations and now wants to file BK. Another charged up $20K in in cc debt on pschycics a few years after a BK. Now she is looking to file a 3rd BK in her life.
So what's a predatory lender? Some people define it as any company that charges higher rates for sub-prime loans. By that definition, most lenders are predatory, but when well-meaning people try to pass laws against them, they end up making it impossible for those that don't qualify for the prime rate loans to get credit. There are a lot more ways to abuse the system than just bankruptcy. CRAs are just as likely to make a mistake in the consumers favor as against them. Further, derogitory credit references doesn't always make bad credit. I see plenty of credit reports where the person has good scores even though they have derogs from a couple years ago. Because this is a credit repair board? The people that use this board are not representative of the population as a whole. BTW, I read plenty of posts from people looking to remove derogatory information but are not concerned about the erroneous part.
Not everyone here is trying to correct erroneous info. And it's very easy for for the CRA's to make a mistake. I know database admins who run a database that is only a fraction of those of the big 4 CRA's and it's a tough job. When you have tens of thousands of changes a month to your database mistakes will happen. And no one forces anyone to sign up for credit. The borrower does all that by himeslf. Like any consumer it's your responsibility to know the product you are purchasing.
And I'm sure that the creditor properly "priced" the risk of loaning to someone just two years out of bankruptcy. It's not like they were taken advantage of.
The point is that there are plenty of ways to screw the system. If you are married you can get separated or divorced, file BK to discharge the credit and then have the ex-spouse open up new credit lines in their name only. If you want to pull a scam you can think up of a lot of things that won't even come to mind for the people here. The agreement that people sign is simple. If you borrow money then you should pay it back. I have gotten away with a few things because of this website, but it doesn't mean it was the right thing to do. If the proposed BK bill was passed a few years ago I wouldn't have been very emotional about it since that was the agreement that I signed with my past creditors.
Re: Re: Predatory Borrowers??? Nope! These mistakes are very heavely weighted to the disadvantage of the consumer. That's how we know many are not mistakes.
Re: Re: Re: Predatory Borrowers??? Well, when I go through a mortgage loan application with my customers, I ask them what negatives I'm likely to see. It's not uncommon for the customer to give me a list of things that don't show up on the credit report. Accounts paid more than 30 days late that show up as on-time, etc. Happens all the time.
Re: Re: Re: Predatory Borrowers??? I believe in predatory borrowers. I have a friend who files CH 7 every 6 years or whenver she can. After BK, she starts getting more CC's then maxes them out sometime before filing and the cycle starts again. Can't say I blame her, heck she works for wal-mart at $6.50 an hour busting her butt. She needs every dollar she can get her hands on.
Re: Re: Re: Re: Predatory Borrowers??? Wow. I'm not sure if you're serious or not. While it is unfortunate that your friend struggles on her income, there are millions of people who manage to live on $6.50 an hour without resorting to what I would consider outright theft. If she signs up for credit cards without a reasonable intention to pay them off, it's theft. If she has cycled through bankruptcy multiple times, I would say that even if she thinks she intends to pay the cards back, it is no longer a reasonable intention. I'm sorry if that seems harsh, but needing every dollar that you can get your hands on doesn't justify theft, even if it's from a big, bad faceless finance company.
Re: Re: Re: Re: Predatory Borrowers??? And again, who is issuing these cards and why should I feel sorry for them? The possibility of bankruptcy, intentional or otherwise, underlies every single unsecured and the occasional secured debt transaction. I would put an exclamation point on the previous sentence in the case of someone that has declared bankruptcy within the past six years. Most credit cards issued to people with significant derogs carry a very significant interest rate. The risk has been or should have been appropriately priced by the creditor. There is a reason that prime and sub-prime accounts carry different interest rates. Any rational creditor has already anticipated the possibility of issuing cards to people like this and have covered their risk with an appropriate interest rate. If a person is able to do this repeatedly, the market is in fact working. Creditors that don't price their risks properly learn how to do so the hard way. And I certainly don't feel sorry for them.
Re: Re: Re: Re: Predatory Borrowers??? I think that it has been established in various threads here that a few years after a BK and a good payment history you can get scores close to 700 again. There are people who do this and then file a BK again. With the various SOL's and time limits on negative trade lines they can get all the credit they want after a few years. Some of them probably also do the same things that are advocated on this website to erase derogs of your report. I've seen news stories of people having to do this years ago when ID theft wasn't as widely done as today.
Re: Re: Re: Predatory Borrowers??? A matter of opinion, however there is a financial incentive for the CRA's to have that mistake be against the consumer. The people on this board probably are not representative of the population as whole. User's of this board tend to be more aggressive and are generally prepared to take the time and endure the hassles involved with fixing their credit, erroneous or legitimate. However there are probably a greater number of people with inaccurate info. on their credit reports doing nothing about it and living it. Most of us here just choose to do something about it, so in that aspect, no we don't represent the population as whole. If a creditor does not report a 30 day late payment to the CRA, that is not the mistake of the CRA, but the creditor. So, it is not really fair to use this as an example of how mistakes of the CRA can benefit the consumer. That is the exactly the same thing the defense lawyer for one of the CRA's said to me recently. Unfortunately, when I gave the CRA letters from my creditors to delete the negative trade-lines, and the CRA refused to investigate on several occasions throughout the course of a year, the possibility of an "accidental" mistake because a little more difficult to believe, refusal to to investigate is a deliberate choice, not something a CRA can scapegoat out to "database errors." Credit reporting is a multi-million dollar business, and the affects of erroneous information on a consumer's report can be devastating, hence the "FCRA." It seems the jury tended to agree when they awarded the plaintiff over $5 million in punitive damages against Trans Union: http://www.nysec.org/addresses/ka120802.html
Predatory Borrowers?, Yeah, Right. How many individuals are capable of DELIBERATELY maxing out credit cards and going bankrupt TWICE? Yes, it's easy to to build up your credit, max out your balances and go chapter 7. Once. How many individuals (absolute numbers or percentage of population) have the knowledge, wherewithal, patience and discipline to rebuild their credit to the point where they have $50,000 credit limits within six years. Now have many individuals with the intention of obtaining these credit limits, maxing them out and going bankrupt have the knowledge, wherewithal, patience and discipline to do so. I just don't see it. I read post after post on this board about the nightmare people go through in rebuilding credit after a bankruptcy. This concept of a predatory borrower is wholly inconsitent with most people's experience after a chapter 7. Let's face it - most creditors dealing with individuals in the first couple of years post-bankruptcy are in fact predatory. Their interest rates and fees typically go beyond what is required to be appropriately compensated for the risk of default - they know that most borrowers fresh out of bankruptcy have few options. We live in a world of "rebuild your credit" credit card programs with 29.99 percent interest rates. $250 application fees, and monthly fees fro the privledge of carrying a credit card with a $200 hundred dollar limit. In the posts here about predatory borrowers, I have seen not seen any that point out that predatory lending can create the exact behavior that is used to describe predatory borrowers. If a creditor somehow loans $50,000 to a borrower at a ridiculously high interest rate, with outrageous fees imposed at a drop of a hat for anything imaginable, it is not hard to see how a borrower could go bankrupt for the second time on the first day he was able to do it. Never mind that in many of these cases, the borrower is clearly and obviously incapable of performing his/her obligations regarding the debt at the time the credit is granted. If I somehow managed to get $50,000 of unsecured credit in six years after a bankruptcy and then went bankrupt again, we're talking about, what, less than $10,000 a year for my efforts? In the mean time, What have I paid in usurious interest and fees to re-establish credit. The payoff simply isn't there for a disciplined, deliberate strategy over several years to defraud creditors with a SECOND bankruptcy. I'm not saying that there are no people that would do something like this. But there numbers are extremely small. Even the speaker cited in that post acknowledges that this is a small problem: "Abernathy said instances of abuse of the bankruptcy laws and exploitative lending are rare, but merit action by authorities." I wholly agree with his statement that "abuse of the bankruptcy laws . . . are rare" with respect to consumers abusing the bankruptcy laws. But I have seen absolutely nothing in any statistics that "merits action by authorities" with respect to predatory borrowing. I vehemently disagree with his statement that "exploitative lending . . . is rare" and I'm sure that most frequent readers of this board would agree. Bankruptcies are at an all-time high. And the economy is in the dumps. The correlation between the two is better explained by factors other than predatory borrowers. This notion of predatory borrowers is simply a straw man meant to bolster the arguments for the new anti-consumer bankruptcy law.
Predatory Borrowers?, Yeah, Right. 1*The point is that there are plenty of ways to screw the system. alent1234 XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX 2*and the so callled system is the screwer. THE END ** *** ** LB 59 """""""""```~~~```'""""""""" Years ago fairy tales all began with "Once upon a time...", now we know they all begin with, "If I am elected..
Predatory Borrowers?, Yeah, Right. ------------------------------------------------------------------------------ Originally posted by Flyingifr If that were not the case, then why are there so many posts from people looking for help correcting erroneous drogue information? -------------------------------------------------------------------------------- 1*Because this is a credit repair board? 2*The people that use this board are not representative of the population as a whole. 3*BTW, I read plenty of posts from people looking to remove derogatory information but are not concerned about the erroneous part ============================= Mycroft ============= 1*because they are getting caught screwing the public with the credit reporting con job and the FICO shell game. 3**nothing wrong with that when they are using it to screw the consumer with. THE END ** *** ** LB 59 """""""""```~~~```'"""""""""
Predatory Borrowers?, Yeah, Right. Sorry for this deplicate post that resulted from a board malfunction. ------------------------------------------------------------------------------ Originally posted by Flyingifr If that were not the case, then why are there so many posts from people looking for help correcting erroneous drogue information? -------------------------------------------------------------------------------- 1*Because this is a credit repair board? 2*The people that use this board are not representative of the population as a whole. 3*BTW, I read plenty of posts from people looking to remove derogatory information but are not concerned about the erroneous part ============================= Mycroft ============= 1*because they are getting caught screwing the public with the credit reporting con job and the FICO shell game. 3**nothing wrong with that when they are using it to screw the consumer with. THE END ** *** ** LB 59 """""""""```~~~```'"""""""""
Predatory Borrowers?, Yeah, Right. The "predatory borrowers" thing is really just a red herring, used by the Congressmen who are trying to push the new BK laws through Congress. The real issue here is that credit card lenders have been making huge campaign contributions, and they are getting impatient to see results on their investment. They want that BK law passed so they can imprison their customers and make them debtors for life. Once that new law passes...and it will, CC issuers will be more like the old-time owner of the 'Company Store.' They will sell a consumer the rope to hang themselves with....at 18% interest. Can't pay off the rope on time? No problem... your interest rate just went from 18% to 28%, and the noose just got a litle tighter. You will no longer have the option to escape your debts, and you'll be forced to deal with the creditor on their terms. Either that, or spend your life hiding in a cave. Scary times are ahead for the chronic debtors. From the book 'The Company Store,' by John Mellor >>>"When miners formed the Provincial Workman's Association, their leaders had warned that the company stores and their iniquitous system of extended credit would eventually be used as a means of forcing miners to accept wage cuts and below-poverty-level existence. A miner deeply in debt to one company store found it impossible to gain credit at another until the debt was paid. With credit extended and little hope of paying debts, the price of goods, especially foodstuffs, was greatly increased to delinquent miners and their families. Without ready money to purchase food, they were unable to deal at a private grocery store, and after long years of inadequate wages, the evil multiplied until their debts stretched far into the distant future without even the remotest hope of repaying them".<<<
Predatory Borrowers?, Yeah, Right. Getting in debt over you head once in your life and learning from it is one thing. Doing it on a regular basis is inexcusable. Last year I was ready to pay off all old debts until I found this website and I decided to take the easy way out. Otherwise I would have been paying off more than $10K in debt and I wouldn't have been very angry since it was my debt. In the last 2 years that I seriously decided to fix my credit, I haven't made one late payment. I'm also controlling how much debt I take on. I'm not buying things on credit just because I decided I need them right at this minute. When I still do it sometimes, I pay it off as fast as possible. I currently have twice the revolving credit that I did when I originally got myself in trouble, and I'm being more responsible with it now. Comparing this new law to a company store is utter BS, since in those cases the company owned the town and the miners had no where to go. In the case of current credit, the customer is the one that signs up for it. No one forces you to sign up for any pre-approval offer. I have one from Amex under a pile of junk in my home and I'll probably toss it in the trash since I don't need their card right now. I get others from time to time and they go in the trash as well.
