Thanks so much for your note, you offer an important perspective.

Allow me to offer a differing view.

The white collar laws now in places are simply insufficient to protect the public. If we define “predatory lending” as overcharging consumers then there is no federal crime for this activity.

The idea that people will read their two inches of loan documents is not plausible. What IS plausible is the idea that the experienced and educated loan officer is obligated to treat the borrower as a client and get the best possible rates and terms. This approach works for lawyers, real estate brokers, doctors, ect. — if they screw up they get sued and the public is generally well protected.

Please continue to post with us, we welcome your views.

Federal and state regulation requires lenders to provide significant disclosure when signing a loan, and this is intended to protect the consumer. Unfortunately loan documentation has become so extensive, that the stack of papers to sign at closing approaches two inches thick.

If people actually took the time to read and undertand all that was printed they would be well informed and knowledgeible about the terms and conditions of their loans and loan signings would take about a day and a half. After witnessing literally thousands of signings I will tell you that most people are so focused on getting into their new home that they have no idea what it was they just signed. This leaves lots of lattitude, both good and bad, to loan officers, allowing them to both protect and steal from their clients.

The solution is stronger enforcement of the laws we already have, putting white collar criminals behind bars for longer periods of time and stricter regulation over who can become a loan officer or a lender. New legislation or process will just add to the height of the loan doc pile without accomplishing much. Let’s enforce the laws and processes we already have rather than seeking to solve the problem with more.

In response to Prof. Bornstein, please press here.