Borrower Defense Rule Revoked by DeVos

If there was any doubt about where the Trump administration stands with respect to borrowers and “lenders”, it has now been erased. The rule, intended to take effect this month, allowed victims of fraud to avoid liability on student loans.

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There is a direct correlation between fraudulent student loans and fraudulent home loans. In both cases the lenders are required by law to do due diligence; and in student loans they are required by standard industry practice to know whether the “college” or “university” is real and can confer an academic degree. While this may be an outgrowth of the Trump University allegations of fraud, it reveals a deeper set of commitment at the expense of values and civil service. It is not the government that is failing us, and not the system either. It is the people in government who are failing us.
Home lenders are required by law to know whether the loan is fair and reasonable and whether the loan is affordable. It is apparent that in student loans, the objective was to initiate or “originate” student loans without regard to whether the institution was real.
The sole value of such loans is derived from the prospect of the student earning a recognized academic degree or certificate and thus gaining employment that will enable the student to repay the loan.
If the institution is a fraud, there is no degree and thus the prospects of better employment is eliminated along with the ability to pay the loan off. But the initiators of student loans didn’t care. Why? Because there was absolutely no risk to them. Why? Because the loans were being subject to probably false claims of securitization or actually securitized. The initiators were paid regardless of how the loan performed and thus didn’t care whether the “institution” was real or fake.
In the same way, home “lenders” ignored false, hyper-inflated appraisals, and “approved” loans that would self destruct within a short period of time because they were not affordable nor even justifiable. The Banks artificially inflated Prices far above Values. Any loan is affordable if the first payment is low enough. But when the alleged loan converts to normal amortization requiring payments exceeding household income the end result is obvious — giving the players an opportunity to bet against them and get paid again.
It remains a creeping cancer on our economy and thus our society that these “loans” continue to be a drag on our economy, eliminating the “Trump bump” that everyone was talking about in the first quarter. It was an illusion.
Projections for the second quarter are all being revised downward. The Great recession never stopped and we are nearing the time for it to be revealed again. The Federal Reserve admits to having $4.5 trillion of the bogus mortgage bonds and other derivative products. That saved the country from a Depression. The rest of the money — at least $10 Trillion more — was sucked out of our economy by the investment banks pushing the illusion of “securitization”. If we really want relief and restored prosperity we need to claw back that money from the handful of institutions that stole it.

3 Responses

  1. and by the way…this headlines a story in American Banker magazine…

    “Delinquencies on car loans, credit cards at highest levels since 2012”

    Trump knows consumers need relief, and he will get us there.
    He just needs to get rid of the anarchists inside the government trying to train-wreck his administration.
    Unlike Obama, Trump loves America and Americans.

  2. You’re wrong on Trump, Neil. I don’t like Mnuchin, but he couldn’t risk tipping the apple cart just yet. First let’s get rid of the deep -state treasonists, get some tax reform, and end the ANTI-TRUST EXEMPTION FOR INSURANCE COMPANIES. He’ll get there.
    Why don’t we all send him a nice , and I mean NICE, letter and include copies of all the bogus ASSIGNMENT OF MORTGAGE documents filed against your property. I think we can get his attention.

  3. Reblogged this on California freelance paralegal.

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