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View Diary: Obama vs. Usury?  Why Not? (Updated) (251 comments)

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  •   So, if banks conclude that a certain segment (3+ / 0-)

    of credit scores/financial backgrounds would produce expenses of 11% (credit losses plus overhead) then there should be no lending to that segment?

    "[R]ather high-minded, if not a bit self-referential"--The Washington Post.

    by Geekesque on Sun Mar 29, 2009 at 02:20:09 PM PDT

    [ Parent ]

    •  Probably not (4+ / 0-)
      Recommended by:
      djpat, Geekesque, quotemstr, Terra Mystica

      It's no secret that some of the loans that are currently going into foreclosure should never have been made. You aren't necessarily doing anyone a great favor giving them a loan that they cannot afford, and are likely to default on. That person in many cases would've been better off without that loan.

      I'm not saying that there are not exceptions, but if the purpose is to make homeownership affordable to more people there are better ways to do it other than high-interest loans. My city gives some, qualified first-time homebuyers a "silent second" loan that is only due upon sale of the property. This brings down the principle of the first mortgage, resulting in affordable payments.

      There are other ways as well -- land trusts where the trust owns the land and the buyer only needs to purchase and pay taxes on the building, limited equity cooperatives, etc.

      I'm also not saying for sure that 11% is the cut off, but to me it most certainly is not 20% or 30%.

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