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posted by martyb on Wednesday November 21 2018, @02:18PM   Printer-friendly
from the always-read-the-fine-print dept.

In a long article on Bloomberg News, but well worth the read:

How unscrupulous lenders have used an obscure legal document to wreck havoc against small businesses nationwide.

The lenders’ weapon of choice is an arcane legal document called a confession of judgment. Before borrowers get a loan, they have to sign a statement giving up their right to defend themselves if the lender takes them to court. It’s like an arbitration agreement, except the borrower always loses. Armed with a confession, a lender can, without proof, accuse borrowers of not paying and legally seize their assets before they know what’s happened. Not surprisingly, some lenders have abused this power. In dozens of interviews and court pleadings, borrowers describe lenders who’ve forged documents, lied about how much they were owed, or fabricated defaults out of thin air.

By seizing their bank deposits, Yellowstone had managed to collect its money ahead of schedule(60k on a 38k loan) and tack on $9,990 in extra legal fees, payable to a law firm in which it owns a stake. In about three months, the company and its affiliates almost doubled their money. At that rate of return, one dollar could be turned into 10 in less than a year.

Everyone else involved in the collection process got a slice, too. SunTrust got a $100 processing fee. Barbarovich’s office(NYC Marshal) got approximately $2,700, with about $120 of that passed along to the city. The Orange County Clerk’s office got $41 for its rubber stamps. The New York state court system got $184.

Cash-advance companies have secured more than 25,000 judgments in New York since 2012 worth an estimated $1.5 billion.

It sure explains why my small business gets a ton of loan/cash advance offers.

It should be noted that these letters have been prohibited in some states for over 50 years, and banned nationwide for consumers since 1984. (but even when banned by a state, they pursue it in a state where they are legal.)


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  • (Score: 1, Insightful) by Anonymous Coward on Wednesday November 21 2018, @04:12PM (11 children)

    by Anonymous Coward on Wednesday November 21 2018, @04:12PM (#764783)

    I disagree. That's the bank buying a home and letting you live in it for a bit cheaper than rent.

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  • (Score: 2) by PiMuNu on Wednesday November 21 2018, @05:03PM (1 child)

    by PiMuNu (3823) on Wednesday November 21 2018, @05:03PM (#764811)

    > bit cheaper than rent.

    In the UK, buy-to-let means that the rental market always follows the mortgage market. If mortgages get cheaper than rent, people invest in housing and mortgages end up costing the same as rent. Risk is perceived to be very small, and there is return on the housing investment (house prices always go up in UK (haha) ).

    • (Score: 0) by Anonymous Coward on Thursday November 22 2018, @02:13AM

      by Anonymous Coward on Thursday November 22 2018, @02:13AM (#765035)

      Risk is typically underestimated by an order of magnitude or two. On the other hand, this schema drives the prices up which makes it unrealistic for a risk adverse person to buy ever.

      Personally, I bought my house 12 years ago using honest to god 20% down fixed interest as a good citizen is supposed to. Did not miss a single payment since then. I sill have negative value and can not move because of this which depresses my income tremendously.

  • (Score: 1) by DECbot on Wednesday November 21 2018, @06:33PM (5 children)

    by DECbot (832) on Wednesday November 21 2018, @06:33PM (#764873) Journal

    That's still a better deal. If you make all your payments, the bank removes the lien against your house and it is yours completely--ignoring government property confiscation laws and such. The point is, the bank and the rest of the corporate sector has no right to your property and the state usually has no interest in the property if you keep paying your property tax. If you happen to move and sell your home before you pay off the loan, you still get to keep everything the buyer agreed to pay after you pay off your agent/broker, sales tax, and bank. That's a good deal if you home appreciates value (which has been the common trend over the past century with a few years of home value depreciation as an exception).
     
    Renting, on the other hand, you throw all of that money to a person or corporation and after 20 years, you still have to keep paying. By the way, the rent just went up again. A fixed rate loan, the mortgage payment stays the same over 20 years, just the taxes and home insurance rates changes.

    --
    cats~$ sudo chown -R us /home/base
    • (Score: 2) by legont on Thursday November 22 2018, @02:22AM (3 children)

      by legont (4179) on Thursday November 22 2018, @02:22AM (#765040)

      That's a good deal if you home appreciates value (which has been the common trend over the past century with a few years of home value depreciation as an exception).

      This is a myth. To be successful, one has to pick up a lucky location, which it is way easier to do on financial market where wrong choices could be sold in seconds and right choices diversified.

      --
      "Wealth is the relentless enemy of understanding" - John Kenneth Galbraith.
      • (Score: 2) by RandomFactor on Thursday November 22 2018, @02:35PM (2 children)

        by RandomFactor (3682) Subscriber Badge on Thursday November 22 2018, @02:35PM (#765196) Journal

        By 'lucky location' you mean one in a good school district?
        .
        As long as there is a next generation, there will be good demand for homes near schools that give good results.

        --
        В «Правде» нет известий, в «Известиях» нет правды
        • (Score: 2) by legont on Thursday November 22 2018, @05:57PM (1 child)

          by legont (4179) on Thursday November 22 2018, @05:57PM (#765261)

          No. Once upon a time I was offered a free (like in free beer) rent in Manhattan with an option to buy. This apartment is valued at $2+ millions now. Since the total US real estate value is just slightly up, there must be places that went total bust (and we all know some of them). This kind of lucky.

          As per your school hypothesis, many of my friends home-school their children. Economically speaking, they prefer to pay their wives as opposed to the government. Internet makes it easier by day. I believe the trend will continue and there will be almost no good brick and mortar schools in the future.

          --
          "Wealth is the relentless enemy of understanding" - John Kenneth Galbraith.
          • (Score: 2) by RandomFactor on Thursday November 22 2018, @06:31PM

            by RandomFactor (3682) Subscriber Badge on Thursday November 22 2018, @06:31PM (#765273) Journal

            Hmm, fair enough, I'll concede that over time, school districts will matter less and less and other factors will increase in relative predictive value.
             
            Average home retention (US, circa 2016) is ~10 years. I wouldn't expect school districts to be off the table in that period of time even though they are quite possibly weakening as a factor.

            --
            В «Правде» нет известий, в «Известиях» нет правды
    • (Score: 0) by Anonymous Coward on Thursday November 22 2018, @02:25AM

      by Anonymous Coward on Thursday November 22 2018, @02:25AM (#765042)

      Not necessarily. When you buy, you are on the hook for all of the maintenance. When you rent, a landlord takes care of it.

      Your property value is tied to the local economy.

      Houses are expensive and complicated to buy and sell. They make moving harder.

      https://jlcollinsnh.com/2013/05/29/why-your-house-is-a-terrible-investment/ [jlcollinsnh.com]

  • (Score: 1) by nitehawk214 on Wednesday November 21 2018, @06:54PM

    by nitehawk214 (1304) on Wednesday November 21 2018, @06:54PM (#764885)

    But its still better than living in someone else's shithole. I will not live in an apartment again, fuck that shit. And, if I am going to live in a house, why not build up my own equity instead of paying rent to someone else in perpetuity?

    Also, you are wrong. Maybe you don't own the house outright, but you have a lot more rights than if you were a renter on someone else's property.

    --
    "Don't you ever miss the days when you used to be nostalgic?" -Loiosh
  • (Score: 2) by RandomFactor on Thursday November 22 2018, @02:31PM (1 child)

    by RandomFactor (3682) Subscriber Badge on Thursday November 22 2018, @02:31PM (#765195) Journal

    Yet still the best investment many (most?) people ever make.

    --
    В «Правде» нет известий, в «Известиях» нет правды
    • (Score: 2) by legont on Thursday November 22 2018, @06:02PM

      by legont (4179) on Thursday November 22 2018, @06:02PM (#765263)

      I suspect it is a survival bias. You see people who invested and still around and don't see folks who went bust and moved away.

      --
      "Wealth is the relentless enemy of understanding" - John Kenneth Galbraith.