Subprime once hurt the elderly, now hurts the world

Subprime lending once hurt the elderly in the United States. It only took three more years for subprime to hurt all borrowers and the entire world economy. Back in 2004 subprime was not necessarily predatory lending. Others argued that mortgage fraud became predatory lending, which then evolved into subprime. Regardless of the position you take it is clear that intervention and prevention at the federal level was missing. Here is part of the 2004 FTC testimony:

In 2004 the FTC told the Senate Committee on Aging: “A recent study found that the population of subprime borrowers tends to be older than the population of prime borrowers. More than a quarter of subprime borrowers are 55 years of age or older, compared to only 14% of prime borrowers. Therefore, while older Americans may have benefitted more from the expansion of the subprime market, they also may have suffered more injury from deceptive practices in the market. The Commission (FTC) is not aware of any evidence that subprime lenders are engaging in illegal practices that specifically target the elderly. In our experience, the illegal practices cut across demographic groups. Nevertheless, these illegal practices can be particularly devastating to seniors.”

Editor’s Note: Little known to the general public was that in Florida Madie Bell Wilson, 89, was evicted from her Miami home. She had taken out a $27,000 home-equity loan from Household International, thinking it was a home repair grant that did not have to be paid back. The case piqued Florida officialsÂ’ interests and helped lead to the $484 million multi-state predatory lending settlement. Household International ultimately forgave Madie Wilson’s loan but the damage was done. HSBC bought Household International and renamed the company HSBC Finance Corporation. (see more)