POLITICIANS TO THE RESCUE...

As is the norm I suspect after the cows are out of the barn is when someone starts worrying about closing the back door. So it is with the politicians who now are concerned about predatory lenders and those that they destroy. Lets keep in mind that predatory lending has been around for at least the last decade. The house passed a bill, house bill 3915, which is called the anti predatory lending bill, (I think). There are some good things about it but the in my opinion overall a big waste of time and effort. I doubt the crooks and thieves are sitting around stressing out over a law that has little or no hope of ever being enforced if it does pass.

In my opinion this bill has very little hope of becoming law. The reason you ask? There is no way to adequately define predatory lending and once all the well intentioned (whatever) politicians try to define it will certainly die a slow and agonizing death. Other politicians are now coming to the rescue with their own versions that try to fix what is wrong with the original version. Another problem is that it is hard to enforce the laws that are on the books that one can define like selling drugs, stealing cars, murder, etc. If a law is passed that has provisions that are open to interpretation then what is the likelihood anyone can or will enforce it. HB 3915 says for instance that if a lender refinances a home then that loan must have a “net tangible benefit” to the consumer. Now if you took all the possible combinations of why a consumer wants to refi their home and you let all the lawyers argue whether they got a net tangible benefit there would be no end. For instance if you wanted to refi your loan to lower your payment but you extended the term on the loan which over the long term made you pay more then would that be a net tangible benefit. I wonder what the odds are that the people who enforce such laws are going to sit around, look at every loan that is made and try to enforce a ridiculous law that no one can define.

The problem is that the lending process is so confusing that the predatory lenders will survive whatever law might be passed and the only group that will win in the end of this mess will be the lawyers who will always get paid.

The politicians need to be fighting the battles that do count and trying to enforce the laws that are on the books as a starter. But in thinking about it if they were to do that then they would not be politicians would they.

If you are getting a loan you better trust the person you are dealing with. Predatory Lenders are out to get you and they know what they are doing. Buyer beware.

If you are interested there is a great article that describes the reality of the Predatory Lender, click on this one.

http://www.nytimes.com/2007/11/20/opinion/20herbert.html?hp


More to come

Lonny