Predatory Lending Still Perfectly Legal

Loan Safe
May 19, 2010
Miller, Peter

Predatory lending practices have been and will remain perfectly legal -- even after the financial reform package is passed -- insists Peter Miller, writing for LoanSafe.org. While the Restoring American Financial Stability Act of 2010 makes great strides to end abuses in the mortgage lending industry, he notes that it does little to make predatory lending illegal. The word "predatory" does not appear at all in the proposed legislation. Miller asserts that predatory lending is not a federal crime because of the simple fact that it lacks a definition. As such, lenders and loan officers have never been required to find the best possible rates and terms for consumers. However, Miller says the mortgage sector could take notes from the annuities sector, where S.3417 discusses "rules with respect to fiduciary or suitability requirements." He envisions similar rules in place for the sale of mortgage liens. Such rules, Miller speculates, would have prevented the financial meltdown and the subsequent federal bailout. He adds, "Predatory lending will always be legal and lawful as long as big lenders have a strangle-hold on Washington. While the new legislation potentially holds many benefits for consumers, the most important benefit of all -- the right to a fair deal in the mortgage marketplace -- remains missing."
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