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Saturday, September 30, 2006

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buy wholesale

A short video clip dealing with overconsumption.

Johnny still can't read

"Rent to own Rims"
"Refund anticipation Loan"
"Got a job, get a Car"

Mahlon

I have represented dozens of victims of predatory lending. In almost every case, the lender complied with all TILA disclosure requirements. The fact of the matter is that most of the borrowers were incapable of understanding what the disclosures meant. You can put anything you want on paper, but if the people do not have a meaningful opportunity to review the disclosures, then those disclosures are little more than bird cage lining.

There are several problems with TILA disclosures. First, most people, even reasonably intelligent and educated people, cannot understand what the disclosures actually mean. Those who fall victim to predatory lenders, however, are not reasonably intelligent or educated. They tend to be unsophisticated and functionally illiterate.

Second, the nature of a closing is not conducive to review of loan documents and disclosures. With everyone in the room waiting, even if the borrower were to examine the disclosures, he or she would feel extremely uncomfortable doing so.

Third, I have not met a single closer who could really explain the TILA disclosures. So even if someone were to question a loan term, etc., the likelihood of getting a correct answer is slim. The lender, of course, is not going to provide a real, helpful answer to questions if it decreases the chances of getting the deal closed. No one, for example, will correctly explain how a borrower pays for a yield spread premium. The most that is explained is that those funds are paid by the lender, not the borrower. The fact that the borrower pays a higher rate as a result, is never disclosed.

Finally, in most cases, by the time the borrowers get to the closing table, they have few, if any options. They do not have the luxury of walking away. Most of these people are desperate. Some will be told flat lies to discourage them from even thinking about rescinding or walking away. The disclosures do not help if the borrower is effectively prevented from acting on them.

There is such a complete overload of disclosure that it is too easy to hide onerous loan terms in plain sight. The disclosure themselves become weapons against the borrowers.

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