Feb 01 2009
Predatory Lenders Need to Cut it Out
Credit companies are dysfunctional predatory lenders. Not only is our current economic situation due to their inadequate handling of debt but they are also only concerned with themselves. As such, our government entities need to look at how these credit companies handle their credit card business and lending practices before they enable them by providing financial incentives to them. Now, you may be wondering what do I mean by dysfunctional? Dysfunctional can be defined as abnormal or impaired functioning. Well I’m labeling credit companies dysfunctional because of how they interact with consumers and issue credit.
Currently, we have numerous home owners who are losing their homes as a result of credit companies making home loans to peoples who could really not afford the home in the first place. That is, why couldn’t they scrutinize the loan closely and only make solid loans to people based on their ability to pay it off? In many cases, these credit companies made loans to people for large amounts of money and they knew they couldn’t afford it. To make matters worse, the borrower was required to pay interest only so the principle remained the same as it was when the home was purchased. Although I am not an expert in money matters, I do know right from wrong and this is wrong.
Let’s say that a person applied for a loan that they could not afford based on cash flow, load to debt ratio and other necessary requirements. If the credit companies were not dysfunctional, they would suggest that the consumer either look for a more affordable home or wait until they become more financially secure instead of giving them a loan they couldn’t afford. Instead, these dysfunctional credit companies made loan and knew darn well that the home owner would not be able to pay for the house. In addition, there is a good chance that the house will probably go into foreclosure and back to the bank due to this transaction. Banks are not in the real estate business so they don’t need real properties to sell.
If credit companies were functional then they would make sure that loans made good financial sense to the lending institutions and the consumer. They would loan money to people who qualify for the loans. In turn, the banks would have more of a guarantee that their loan would be paid. Banks and other lending agencies should work to make sure that the financial goals of the creditor is being met as well as that the loans that are made make sense to the consumers. After all, most people who functions with a full deck don’t wants bad credit and will make sacrifices to pay this debt!
Credit card companies should make loans for the right reasons. They should not let the greed factor enter into the decision making. Many CEO’s went down in the last few years due to greed. Can you imagine how those dysfunctional thugs allowed themselves to misuse people for the sake of money? They not only made huge salaries with all of the amenities in place including private jets and they still wanted more. This happened in more than one instance. The mere fact that these were the people chosen to run the large lending agencies shows just how dysfunctional credit companies have become.
Financial agencies need to be considerate of their customers during these tough economic times. By being considerate to their needs, they can circumvent many issues. In fact, by being functional, they could help develop a long standing and positive client relationship that guarantees more business in the future. In addition, their client will refer more clients and their institution will not need government bailouts and other goofiness to get them out of financial trouble.
In conclusion, lending agencies must stop being dysfunctional and start treating their clients with respect and individually work with them to create lending situations that are beneficial to both entities. Otherwise, they’ll be left with a boatload of bad debt and be at risk of bank failure.
