DOCSLIB.ORG

DREAMS FORECLOSED: the Rampant Theft of Americans’ Homes Through Equity-Stripping Foreclosure “Rescue” Scams

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
DREAMS FORECLOSED: the Rampant Theft of Americans’ Homes Through Equity-Stripping Foreclosure “Rescue” Scams DREAMS FORECLOSED: The Rampant Theft of Americans’ Homes Through Equity-stripping Foreclosure “Rescue” Scams DREAMS FORECLOSED: The Rampant Theft of Americans’ Homes A Report by Through Equity-Stripping National Consumer Law Center Foreclosure “Rescue” Scams June 2005 Written and researched by: Steve Tripoli, Consumer Advocate, National Consumer Law Center Elizabeth Renuart, Staff Attorney, National Consumer Law Center ACKNOWLEDGMENTS National Consumer Law Center attorneys Will Ogburn, John Rao and Margot Saunders provided legal guidance and editorial assistance in the preparation of this report. NCLC’s Svetlana Ladan formatted the report and its graphics. We also wish to thank the dozens of consumer lawyers, advocates, their clients and others named in this report for their unstinting devotion to seeing this information come to light and their substantial efforts to provide that information. Cover art courtesy of Benenson Janson Advertising, Studio City, CA. National Consumer Law Center is a non-profit organization with 37 years of working experience in consumer issues, especially those affecting low-income consumers. NCLC works with and offers training to thousands of legal- service, government and private attorneys, as well as community groups and organizations representing low-income and elderly people. Our legal manuals and consumer guides are standards of the field and can be ordered directly at www.consumerlaw.org or by calling our Publications Department at 617-542-9595. National Consumer Law Center 77 Summer St. 10th Floor Boston, MA 02110 Phone: 617-542-8010 http://www.consumerlaw.org Copies of this report are available by mail for $35 each paid in advance (checks only), or by downloading from NCLC’s website TABLE OF CONTENTS INTRODUCTION: THE BLIND SPOT 100,000 HOMES WIDE..................................................5 PART 1: STEALING WHATEVER IS NAILED DOWN...............................................................7 l. What’s a Foreclosure “Rescue” Scam? .............................................................................................8 ll. Why Do Homeowners Fall for These Scams?................................................................................10 CALIFORNIA SCHEMIN’: TWO STORIES ...................................................................................11 “I Said, ‘The House is Still in My Name!’ And She Said, ‘You’re in Trouble’”...........................12 “...and I Still Didn’t Feel Like They Were Lying to Me” ..............................................................13 LOOPHOLES GALORE: OLIVIA ORTIZ’ CONTRACT WITH H.A.S ..........................................14 PART 2: THE HIDING-IN-PLAIN-SIGHT PANDEMIC ............................................................15 l. CALIFORNIA: "An explosion...like I've never seen before" ........................................................15 ll. COLORADO: "We're struggling to get our arms around it".........................................................17 lll. DISTRICT OF COLUMBIA: Renting your own house back......................................................19 lV. FLORIDA: "More prevalent than even high-risk....loans”..........................................................20 V. GEORGIA: "The guy who lies the most gets the most deals"......................................................23 Vl. ILLINOIS: "We're seeing outright forgeries"..............................................................................24 Vll. MARYLAND: "There are clearly violations out there".............................................................24 Vlll. MASSACHUSETTS: "They're getting...more entrepreneurial" ...............................................27 lX. MICHIGAN: "This is not just a bunch of small fish" .................................................................29 X. MINNESOTA: High-profile cases spawn a new state law...........................................................30 Xl. NEVADA: "People in distress....don't exercise their rights".......................................................32 Xll. NEW YORK: "The homeowners never see any of this money" ................................................33 Xlll. NORTH CAROLINA: "We've yet to see one....actually work"................................................34 XlV. OHIO: Scammers' mode of operation: Take a lot, do a little....................................................34 XV. OKLAHOMA: "Guess what, you need a Chapter 13!" .............................................................36 XVl. TEXAS: Notorious Colorado figure gets back in business.......................................................36 XVll. VIRGINIA: “My client is paralyzed with fear”........................................................................38 XVlll. WASHINGTON: "The whole thing was set up to fail"..........................................................39 PART 3. DO-IT-YOURSELF EQUITY STRIPPING: THE INFORMAL INDUSTRY TEACHING “RESCUE” TACTICS................................................................................................40 "Stay unassociated with the end results. Caring costs money. ".........................................................44 PART 4. FIGHTING BACK: WHAT REGULATORS, THE LAW, ENFORCEMENT, AND CONSUMERS CAN DO ...................................................................................................................45 l: Can Homeowners Fight Back Effectively? ....................................................................................45 ll: Recommendations to States: Beef Up Your Laws or Witness a Mounting Loss of Home Ownership ......................................................................................46 III. What Consumers Can Do .............................................................................................................50 IV. One Response That May Be a Useful Model ...............................................................................53 APPENDIX A: EXHIBITS ..............................................................................................................54 “I SAW THAT THERE WAS A SEAL. IT LOOKED LIKE A GOVERNMENT SEAL. AND WE THOUGHT THEY’D HELP US.” .............................................................................................55 “PLEASE CALL ASAP ABOUT THE ENCLOSED CHECK!”..........................................................56 A BUNDLE OF TACTICS CONSUMERS SHOULD VIEW WARILY................................................57 “ALL CALLS THE CLIENTS COULD HAVE MADE THEMSELVES” ............................................58 A SAMPLER OF APPEALS FROM ONE STATE ..............................................................................59 PROMISES OF MILLIONS – BUT FOR WHO?................................................................................60 $10,000 A MONTH, GRAMMAR CHECK NOT INCLUDED............................................................62 APPENDIX B: OVERVIEW OF EXISTING STATE LAWS ......................................................63 I. Types of Activities Covered...........................................................................................................64 II. Scope of the Laws ..........................................................................................................................64 III. Notice and Cancellation Rights ....................................................................................................64 IV. Substantive Protections.................................................................................................................65 V. Remedies........................................................................................................................................66 DREAMS FORECLOSED: The Rampant Theft of Americans’ Homes Through Equity-stripping Foreclosure “Rescue” Scams INTRODUCTION: THE BLIND SPOT 100,000 HOMES WIDE If a tsunami were to sweep across America, selectively taking with it thousands upon thousands of people’s homes, would the news media cover it? What if many thousands of people awoke one morning to find their retirement savings suddenly missing? Would the Congress take note? Well, something quite similar is going on. Homes are literally being stolen from their owners all over the country. In this report you'll read about those who target many thousands of good people, people often under serious stress, and shake all or most of the value out of what’s often their only major asset. The wrecked lives the predators leave behind are not their concern. It's hard for most Americans, and even watchdogs like the news media, to grasp that a small-but-significant slice of society is composed of those who coldly prey on others. Most of us don't see this because we can’t believe, as the predators do, that duping and scamming our neighbors or taking advantage of their trust is a good way to live. But these predators aren’t just “a few bad apples,” as their apologists are often quick to claim. And their impact reaches far beyond their relatively-small numbers. Such predators are a big reason why we've always needed consumer protection laws in America. Now, the modern collision of a deregulated economy with the “middle-class squeeze” of stagnating wages and rising costs for many life necessities makes new and stronger laws all the more vital. When a family’s hard-earned home equity is pillaged even those who've worked very hard and played by the rules are often left just one bad break away from ruin -- with all its attendant stress, heartache and family unraveling.
Load more

Recommended publications
  • Urban Markets Initiativeurban Markets Initiative
    METROPOLITAN POLICY PROGRAM T HE B ROOKINGS I NSTITUTION Neighborhood Housing Markets and the Memphis Model Linking Information to Neighborhood Action in Memphis, Tennessee By Phyllis G. Betts lthough downtown revitalization, innovative mixed-income redevelop- ment, and gentrification are reinvigorating deteriorated inner-city A neighborhoods in cities across the country, too little attention is paid to declining middle-income neighborhoods such as Hickory Hill in Memphis, Tennessee.1 In the absence of interest from either urban pioneers or targeted government programs, these neighborhoods continue to decline, and poverty enclaves are recreated within once middle-class housing markets. The signifi- cance of declining middle-class neighborhoods is underscored by a comparison of 1970 and 2000 census data, where the percentage of middle-income neigh- borhoods among all neighborhoods in metropolitan areas declined from 58% to 41%.2 Urban policymakers often have neither a fundamental understanding of what is happening in these housing markets nor a strategy to advance them. The Memphis Neighborhood Housing Markets Modeling project (the Memphis Model) is addressing this information gap using Hickory Hill, a destabilizing community southeast of downtown Memphis, as a pilot community. This brief discusses how the Memphis Model uses insights from the “information cycle” to conceptualize and implement local information systems that close the information gap for declining middle-income housing markets.3 New knowledge is mobilizing stakeholders and
    [Show full text]
  • Homeownership Is Affordable Housing
    Briefing on Affordable Homeownership and Infrastructure Briefing Book Table of Contents 1. Agenda 2. Black Homeownership Collaborative’s 7-Point Plan 3. Case for Homeownership 4. Restoring Communities Left Behind Act, Fact Sheet 5. Neighborhood Homes Investment Act, Fact Sheet 6. Urban Institute: Research on Homeownership and Housing Affordability Agenda 2:00 p.m. Introduction and welcome – David Dworkin, President & CEO, National Housing Conference 2:05 p.m. Mike Loftin, CEO, Homewise, Inc. Albuquerque, New Mexico and Nonresident Fellow, Urban Institute - Homeownership is affordable housing 2:15 p.m. Panel Discussion – How homeownership benefits families and the economy and how nonprofits are creating new paths to homeownership • Ed Lee, President & CEO, Habitat for Humanity of Greater Cincinnati • Tayani Suma, Senior Vice President, Real Estate, Atlanta Neighborhood Development Partnership • Noerena Limon, Senior Vice President for Public Policy and Industry Relations, National Association of Hispanic Real Estate Professionals 2:35 p.m. How Tennessee is expanding homeownership Ralph Perrey, Executive Director, Tennessee Housing Development Agency 2:45 p.m. H.R. 816, the Restoring Communities Left Behind Act Representative Marcy Kaptur (D-OH) 2:50 p.m. S. 98, the Neighborhood Homes Investment Act Senator Rob Portman (R-OH) 2:55 p.m. Conclusion Natosha Reid Rice, Vice President, Global Diversity, Equity and Inclusion Officer, Habitat for Humanity A 7-point plan to increase Black homeownership by 3 million households by 2030 The Black homeownership rate has plummeted to levels not seen since segregation in housing was legal. Even more disturbing is the fact that in the decade since the end of the Great Recession, it has continued to fall, while every other demographic group has seen significant recovery.
    [Show full text]
  • A Foreclosure Rescue As the Solution to the Trapped Homeowner Equity Problem Cori Harvey Florida A&M University College of Law, [email protected]
    Florida A&M University College of Law Scholarly Commons @ FAMU Law Journal Publications Faculty Works Spring 2014 "We Buy Houses": A Foreclosure Rescue as the Solution to the Trapped Homeowner Equity Problem Cori Harvey Florida A&M University College of Law, [email protected] Follow this and additional works at: http://commons.law.famu.edu/faculty-research Part of the Banking and Finance Law Commons, Bankruptcy Law Commons, Consumer Protection Law Commons, and the Property Law and Real Estate Commons Recommended Citation Cori Harvey, "We Buy Houses": A Foreclosure Rescue as the Solution to the Trapped Homeowner Equity Problem, 79 Mo. L. Rev. 371 (2014). This Article is brought to you for free and open access by the Faculty Works at Scholarly Commons @ FAMU Law. It has been accepted for inclusion in Journal Publications by an authorized administrator of Scholarly Commons @ FAMU Law. For more information, please contact [email protected]. "We Buy Houses": A Foreclosure Rescue as the Solution to the Trapped Homeowner Equity Problem Cori Harvey* 1. INTRODUCTION Foreclosure rescue transactions are viewed widely as scams designed, among other things, to dupe poor, minority, and elderly homeowners out of the equity in their homes. 1 The transactions are frequently called "foreclosure rescue scams.t" "equity skimming schemes.t" or other derogatory terms. However, foreclosure rescue transactions come in many forms and, as an alternative to foreclosure, often maintain valuable options for homeowners that the homeowners otherwise would lose in the traditional foreclosure pro­ cess.4 For this reason, many of these transactions, though imperfect, should be preserved and supported.
    [Show full text]
  • Foreclosure Reform Amid Mortgage Lending Turmoil: a Public Purpose Approach
    Scholarship Repository University of Minnesota Law School Articles Faculty Scholarship 2008 Foreclosure Reform Amid Mortgage Lending Turmoil: A Public Purpose Approach Prentiss Cox University of Minnesota Law School, [email protected] Follow this and additional works at: https://scholarship.law.umn.edu/faculty_articles Part of the Law Commons Recommended Citation Prentiss Cox, Foreclosure Reform Amid Mortgage Lending Turmoil: A Public Purpose Approach, 45 HOUS. L. REV. 683 (2008), available at https://scholarship.law.umn.edu/faculty_articles/277. This Article is brought to you for free and open access by the University of Minnesota Law School. It has been accepted for inclusion in the Faculty Scholarship collection by an authorized administrator of the Scholarship Repository. For more information, please contact [email protected]. ARTICLE FORECLOSURE REFORM AMID MORTGAGE LENDING TURMOIL: A PUBLIC PURPOSE APPROACH Prentiss Cox* TABLE OF CONTENTS 1. INTRODU CTION ..................................................................... 685 II. RISING MORTGAGE FORECLOSURES IN THE U NITED STATES ......................................................... 687 A. Rising Foreclosuresand the Subprime Lending Connection ..................................................... 688 B. Impact of Rising Foreclosureson Communities ........... 693 1. Concentrated Subprime Mortgage ForeclosuresAre Causing Blight ........................... 693 2. Metropolitan Example: Minneapolis, Minnesota ........................................ 696 III. BORROWERS, LENDERS, AND
    [Show full text]
  • Loans and Credit
    Credit Repair Scams Tips: What is in your Credit Report? There is a brisk business among so-called Shop Around If you’re having trouble getting credit, try “credit repair” companies that charge from Once you have determined which type of checking your credit report yourself. You $50 to more than $1,000 to “fix” your loan is best for you, check with several can obtain one free credit report a year credit report. In many cases, these outfits lenders, compare terms, rates and conditions. from each credit reporting bureau, by take your money and do little or nothing to visiting www.annualcreditreport.com or by improve your credit report. Often, they just Ask Questions contacting the three credit reporting bureaus: vanish. There are no quick or easy cures Is the application fee refundable if you Equifax, Experian, and Transunion. The for a poor credit history. If a credit repair don’t qualify or decide not to accept the credit report tells how you’ve managed company promises you it can clean up your loan? What is the annual percentage rate? your credit in the past. Companies examine credit report, remember the following: Is it fixed or adjustable? Is there a balloon your credit report before deciding whether payment at the end of the term? to give you credit. When a company denies Your credit history is maintained by private your request for credit because of your companies called credit bureaus that collect Review and Negotiate credit report, it must tell you so and identify information reported to them by banks, Once you have chosen a lender, try to the credit reporting bureau that supplied the mortgage companies, department stores, negotiate.
    [Show full text]
  • Supreme Court of the United States ______BANK of AMERICA CORP., ET AL., Petitioners, V
    NO. 19-675 IN THE Supreme Court of the United States _______________________________________________ BANK OF AMERICA CORP., ET AL., Petitioners, v. CITY OF MIAMI, FLORIDA, Respondent. ________________________ On Petition for a Writ of Certiorari to the United States Court of Appeals for the Eleventh Circuit _________________________________________________ BRIEF IN OPPOSITION _________________________________________________ Victoria Méndez Robert S. Peck CITY OF MIAMI Counsel of Record OFFICE OF THE CITY CENTER FOR ATTORNEY CONSTITUTIONAL 444 S.W. 2nd Avenue LITIGATION, P.C. Suite 945 455 Massachusetts Ave., Miami, FL 33130 NW (305) 416-1800 Washington, DC 20001 (202) 944-2874 [email protected] Counsel for Respondents Additional counsel listed on inside cover Erwin Chemerinsky UNIVERSITY OF CALIFORNIA BERKLEY SCHOOL OF LAW 215 Boalt Hall Berkeley, CA 94720 (510) 642-6483 [email protected] Joel Liberson TRIAL & APPELLATE RESOURCES, P.C. 3635 Torrance Blvd., 3d Floor Torrance, CA 90503 (917) 848-3218 [email protected] Rachel Geman Daniel Seltz Avery S. Halfon LIEFF CABRASER HEIMANN & BERNSTEIN, LLP 250 Hudson Street, 8th Floor New York, NY 10013 (212) 355-9500 [email protected] Sherrie R. Savett Sarah Schalman-Bergen Patrick Madden Christina Black BERGER & MONTAGUE, P.C. 1818 Market Street, Suite 3600 Philadelphia, PA 19103 (215) 875-3000 [email protected] i QUESTION PRESENTED In 2017, this Court, in this case, held that the City of Miami had standing under the Fair Housing Act (FHA) to sue for lost property taxes and excess municipal expenditures, and that the pleading standard for proximate cause specific to the FHA and how allegations fit those standards should receive the benefit of decisions from the lower courts.
    [Show full text]
  • United States District Court for the Northern District of Illinois Eastern Division
    Case: 1:14-cv-09548 Document #: 143 Filed: 03/26/18 Page 1 of 37 PageID #:<pageID> UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION COUNTY OF COOK, ILLINIOIS, ) ) Plaintiff, ) 14 C 9548 ) vs. ) Judge Gary Feinerman ) WELLS FARGO & CO., WELLS FARGO FINANCIAL, ) INC., WELLS FARGO BANK, N.A., and WELLS ) FARGO “JOHN DOE” CORPS. 1-375, ) ) Defendants. ) MEMORANDUM OPINION AND ORDER County of Cook, Illinois, alleges in this suit that Wells Fargo & Co. and related entities (collectively, “Wells Fargo”) issued predatory subprime mortgage loans to Cook County residents that over the years went into default and drove the mortgaged properties into foreclosure. According to the County, because the scheme was and remains concentrated in heavily minority neighborhoods, Wells Fargo has violated Title VIII of the Civil Rights Act of 1968, 42 U.S.C. § 3601 et seq., more commonly known as the Fair Housing Act (“FHA”). The court dismissed the original complaint on the ground that the County, on the facts alleged, did not fall within the FHA’s zone of interests and thus was not an “aggrieved person” entitled to sue under the Act. Docs. 59-60 (reported at 115 F. Supp. 3d 909 (N.D. Ill. 2015)). Cook County filed an amended complaint, Doc. 65, and Wells Fargo again moved to dismiss, Doc. 70. While that motion was pending, the Supreme Court granted certiorari to review City of Miami v. Wells Fargo & Co., 801 F.3d 1258 (11th Cir. 2015), and City of Miami v. Bank of America Corp., 800 F.3d 1262 (11th Cir.
    [Show full text]
  • How to Have Multiple LLC's with One Tax Return and One Checking
    NEW PROBLEM-SOLVING E-BOOK: How To Have Multiple LLC’s With One Tax Return and One Checking Account - Combine With Equity Stripping – ________________________________ Save Hundreds Even Thousands In Legal & Accounting Fees 1 Author: Albert Aiello, CPA, MS Taxation William Noll, Esq, Cpa Publisher: ISU\Information Services Unlimited Phone: 267-273-0927; Fax 215-271-6708 Email: [email protected] ALL RIGHTS RESERVED BY STRICT COPYRIGHT LAW Copyright 2019 - All Rights Reserved. Printed in the United States of America. First edition. Copyright - Information Services Unlimited (ISU). Please respect the thousands of hours invested to research and create this intellectual property and our rights to this material. No part of this program may be sold (including on the internet), transferred, reproduced by any means, stored in any information retrieval system or transmitted in any form or by any means without the specific written permission of ISU. This intellectual property is for YOUR USE ONLY as a single licensee and not for your clients, customers, patients, partners, business associates, family members, friends, professional advisors, NO one else; unless you are given express written permission from ISU\Information Services Unlimited specifically allowing who else can use this intellectual property. Legal action will be brought against you and/or your company if you are found to have made ANY unauthorized copies of these materials, in part or in whole. Unauthorized copying is AGAINST THE LAW, regardless of intent: No matter if you make a profit or not, you are committing a serious copyright infringement crime, punishable by severe fines and imprisonment, and you may be held liable under BOTH civil and criminal law.
    [Show full text]
  • Consumer Tips from Attorney General Roy Cooper
    Consumer Tips From Attorney General Roy Cooper Home Equity Scams: Borrowers Beware Your home is probably your most valuable possession. Unfortunately, if you agree to a loan that's based on the equity you have in your home, you may be putting your most important asset at risk. Watch out for abusive lending practices like these that could cause you to lose your home: Equity Stripping: The lender makes a loan based upon the equity in the your home, whether or not you can make the payments. If you can’t keep up with the payments, the lender will foreclose–taking your home and the equity you spent years building. Loan Flipping: A lender refinances your original loan with a new long-term, high-cost loan. Each time the lender “flips” the existing loan, you must pay points and assorted fees. With each refinancing, you increase your debt. If you aren’t able to make your payments, you could lose your home. Packing: You receive a loan that contains charges for services you did not request or need. “Packing” most often involves the forced purchase of credit insurance. In North Carolina, lenders cannot require the purchase of most types of credit insurance. If you buy the insurance, you’re paying extra for your loan. Hidden Balloon Payments: You've fallen behind in your mortgage payments and may face foreclosure. Another lender offers to refinance your mortgage and lower your monthly payments. But look at the loan terms carefully. The payments may be low because you’ll owe a huge lump sum called a balloon payment at the end of the loan term.
    [Show full text]
  • Tricks Final2.Pmd
    Trick #3 The Predatory Growing the Debt Tricks Upstreaming and wrap-arounds are efforts by lenders to Lending grow the debt. Having borrowed a small amount to purchase an appliance or another consumer good, & Trick #1: consumers are approached by the lender about borrowing Its Tricks Selling the Monthly Payment more money. This usually ends up in the lender having the consumer refinance their mortgage and add in all When dealing with loans, it is a mistake to focus their consumer debt for one loan payment secured by exclusively on the monthly payment — it’s not the whole their home. While debt consolidation can have story. Of equal or greater significance are — What is the advantages, there are often serious risks as well. First, In today’s lending market, more and more people can loan’s interest rate and other finance charges as shown changing regular consumer debt into a mortgage loan qualify for a home loan or equity line of credit. However, by its annual percentage rate (APR)? How long will it last means non-payment can now result in foreclosure and some unscrupulous lenders and brokers have taken ad- and how much will it cost in total payments? Will the the loss of your home. Second, the monthly “savings” vantage of the situation to place borrowers in unneces- regular monthly payments pay it off, or is there one large from a lower payment as a result of a mortgage sarily costly and inappropriate loans for their own finan- balloon payment at the end? Is there a risk of the interest consolidation or equity consolidation loan will be quickly cial gain.
    [Show full text]
  • Equity Lines of Credit on Rental Property
    Equity Lines Of Credit On Rental Property Godart jee aerodynamically while tannic Lev babbled organically or epistolize idolatrously. Nasty and matted Ave traffics high-handedly and tangos his Giselle boldly and debatingly. Measureless and lotic Wye tower her specialists garrotting unevenly or lambasting Saturdays, is Cass lichenous? This interest rates on other factors to notify my mortgage companies we can also play in their mortgage is a heloc may apply, allowing us about applying and lines of credit lines have Husband, rental industry expert and compulsive traveler, Brian visited ten countries last year. Rates, terms, and conditions subject too change. Get smart answers to all remote mortgage questions. If you decide to access this website, you fly so entirely at its own risk and tremble to the faucet and conditions of mob on such website. There about two types of investment property LOCs. Actual time of funding may differ depending on appraisal, title however other underwriting requirements. Save it and securely upload documents online. They type out there! Closing costs vary, then there generally are no fees or prepayment penalties associated with portfolio lines of credit. Lending Tree: Can go Get a common Equity line of Credit on an Investment Property? APR is subject after change simply may surrender after consummation. Central One Premium Checking account. HELOC has a variable interest through, which body it should go rain or down. Merrill is junior responsible legal and does real endorse, guarantee or monitor content, availability, viewpoints, products or services that are offered or expressed on other websites. What Is possible Property Mortgage? What reach the potential benefits of coming a HELOC? Do not send you treat the heloc out of equity of credit can add rentable square footage by? We earn to knowing each client with great lending terms subsequent to structure a shiver that meets unique needs.
    [Show full text]
  • Predatory Lenders
    PREDATORY LENDERS Flipping, Packing, Stripping, and Ballooning Their Way to Profits Introduction Predatory lenders have been robbing the poor in our society for thousands of years. In Ezekiel 18:13, the prophet Ezekiel stated that “lending at usury and taking excessive interest is a detestable thing”. In Nehemiah 5:10 the prophet Nehemiah stated “let the exacting of usury stop”. In John 2:14, Jesus Christ himself became angry at the moneychangers in the Temple because they were gouging the poor with exorbitant and usurious interest rates. From biblical times until the 1900’s, predatory lending was done through small time operators like the street corner loan shark. In the 1980’s, after President Reagan’s de-regulation of the banking industry, many large Wall Street Banks entered the predatory lending market. It is no longer a small street corner business, but is now a multi-billion dollar industry run by Wall Street’s largest banks. These banks handle predatory lending through their subsidiaries, as if they are ashamed of their own practices. If a low-income consumer enters www.beasleyallen.com Copyright © 2007 Beasley Allen, et al. All rights reserved. the door of a major bank, he will be steered to its subsidiary to get a loan. There is one door for certain people, and other doors for others. Predatory lenders make loans in what is called the sub-prime market. This is a market for consumers who are not considered creditworthy by traditional banks. Predatory lenders prey on the most vulnerable people in our society and typically target minorities, the working poor, and the elderly with their high priced loans.
    [Show full text]