Mortgage & Loan: Predatory Lending Targets Higher-Income Homebuyers

It would seem that the report from the Center for Responsible Lending on subprime mortgages targeted to higher-income buyers was on the mark after all. The Washington Post yesterday looked into the spread of the spread of subprime mortgages in Philadelphia:

The Philadelphia study concludes that predatory lenders are not targeting the poorest neighborhoods. Rather, they're seeking moderate-income neighborhoods where they can squeeze the equity of a house. The higher the interest rate on a mortgage, the more commission a loan provider typically makes.

The Post article also notes the efforts of D.C. Council member Mary Cheh to introduce legislation to spell out lending terms in clear prose on red paper. I'm not sure why it has to be red, but as long as it's read, that's all that counts.

And on the federal level, no less than Dem presidential heavyweight Hillary Clinton is saying the same thing:

The New York senator said borrowers should have more access to counseling and unbiased advice on lenders, loan types and refinancing options and that mortgage documents should be written in plain, easy-to-read language. "We need clear, easily understood language in all these documents," Clinton said. "Enough with the confusion and complexity."

Now that it's clear that subprime lending and predatory practices are not the exclusive province of the poor-and-nonwhite markets, hopefully we can finally see some good laws put into play that will keep this from happening again.

Posted at April 4, 2007 05:48 PM

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It would seem that the report from the Center for Responsible Lending on subprime mortgages targeted to higher-income buyers was on the mark after all. The Washington Post yesterday looked into the spread of the spread of subprime mortgages in Philadelphia: The Philadelphia study concludes that predatory lenders are not targeting the poorest neighborhoods. Rather, they're seeking moderate-income neighborhoods where they can squeeze the equity of a house. The higher the interest rate on a mortgage, the more commission a loan provider typically makes. The Post article also notes the efforts of D.C. Council member Mary Cheh to introduce legislation to spell out lending terms in clear prose on red paper. I'm not sure why it has to be red, but as long as it's read, that's all that counts. And on the federal level, no less than Dem presidential heavyweight Hillary Clinton is saying the same thing: The New York senator said borrowers should have more access to counseling and unbiased advice on lenders, loan types and refinancing options and that mortgage documents should be written in plain, easy-to-read language. "We need clear, easily understood language in all these documents," Clinton said. "Enough with the confusion and complexity." Now that it's clear that subprime lending and predatory practices are not the exclusive province of the poor-and-nonwhite markets, hopefully we can finally see some good laws put into play that will keep this from happening again.