Were Their Actions Predatory?
May 30th, 2007 categories: San Diego Real Estate
When a loan broker who is working on commission focuses on the sale and not the borrower are they predatory? Getting weak buyers approved for stated income/asset adjustable loans with low start rates and a total disregard for whether or not a borrower could repay the loan payments when the rates adjusted, were their actions predatory?
What about the Buyer then. How about all the extra fees that were paid for the extra risk? Who paid all that, the Buyer, the seller? We see the outcome as the rates are adjusting up and defaults are doubling, even tripling every month. These buyers in many cases were set up to fail.
These actions were especially egregious as lenders eager to meet Wall Street demands for loans, were devising loan packages that were by all accounts, predatory. One good example of one of the loan packages was the “Payment -Option” loans. These loans allow the debt to increase every month. They were often stated income/asset loans that did not require the borrower to document any personal finances. This did nothing to prevent the borrower fromexaggerating in some some cases just out and out lie about their wealth, or lack there of.
If the credit was OK, the loan was approved.
Were they predatory? I hear about the defaults but not very about action taken against those that profited from these extraordinary loans. We are seeing a rush by regulators to stiffenall the guidelines. But this is after the fact. Who was in charge while all this was going on? Certainly better oversight and more in place procedures could have and may have offset a number of these defaults.
