Monday, May 25, 2009

But …we only ripped them off a little!

Bank of America Revises 64,000 Loans After Pact With States

BoA, the largest U.S. bank, modified more than 64,000 home loans for borrowers between December and March after settling charges over predatory lending in an agreement with 42 states.

Posted by alan @ 09:43 PM (903 views)
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8 thoughts on “But …we only ripped them off a little!

  • “But …we only ripped them off a little!”

    Who’s been ripped off, alan?

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  • Who is the more culpable?

    – the lender, offering a loan that cannot be repaid.

    – the borrower, signing for a loan that cannot be repaid.

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  • devo – the concept of predatory loan has been in American law since colonial times. English spivs used to make loans to farmers in NY state and then demand payment before the harvest was in. The farmers couldn’t pay and the spivs foreclosed and got the land cheaply. In response the Fraudulent Conveyance law was passed in the state, establishing the principle that if a lender makes a loan without a clear understanding of how the debtor can repay in the normal course of his business the law is deemed predatory and is therefore null and void.

    It will be interesting to see this principle applied internationally, with debtor countries claiming that they or their institutions or individuals are in a similar position to that of an unsophisticated individual being conned by a fast-talking broker, with diplomatic coercion forcing deals on them that strip them of assets and harm their economies. Korea is mounting a legal case against foreign banks that sold junk derivatives in the country. It is using the predatory loan principle that deals set up by dealers that set out to rip off investors or borrowers should be considered null and void. A class action of this kind would have profound implications for the Anglo-American international banking system and its IMF heavies.

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  • 3. icarus said.. if a lender makes a loan without a clear understanding of how the debtor can repay in the normal course of his business the law is deemed predatory and is therefore null and void.

    Thanks for that, icarus.

    Did you see David Faber’s ”House Of Cards” on CNBC earlier today ( Monday) ?

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  • That’s interesting, Icarus.

    Watching the US programs about predatory loans, the programmes featured “weak people” who were “ripped off”. Of course, they were obliged to check what they signed up for. They trusted…doh!

    WC Fields said in Chicadee “never give a sucker an even break”, I guess that saying in a classic black & white comedy became a mantra for many loan institutions….

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  • I’m not saying that borrowers are innocents who’ve been fleeced by the big bad wolf. On the other hand the concept of predatory loans is legally established and in reality there is a system based on loans that are predatory and extractive rather than productive and a substantial proportion of these kinds of loans and deals are made internationally.

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  • @3 – last line, first para – word should be “loan”, not “law”.

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  • BoA revised 64,000 for loss of $823.5M = $12.9K /loan
    Countrywide revised 390,000 for loss of $8.4B = $21.5K /loan
    Paints a picture.

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