Letters to the Editor

Re: 'Anti-predatory-lending bill passes U.S. House committee' (Nov. 8)

Dear Editor:

The determination of "reasonable ability to repay" is going to be a problem for the lending community. I wouldn't be surprised if borrowers sue lenders if they default. They will claim that the lender shouldn't have given them that mortgage in the first place. Even if the lender can prove debt-to-income ratios have been met, if the borrower defaults he or she will try to sue the lender.

What is needed is a Web-based monitoring tool whereby the borrower will be guided to stay on track even under changing financial circumstances, i.e. loss of income, changes in expenditures, etc. This way, the borrower will also be held responsible for submitting financial data to this Web-based tool, which will guide the borrower as to whether he or she is spending or charging too much -- which would jeopardize his or her ability to pay the mortgage.

Let's place some responsibility on the borrower! This tool can then be used as a defense by the lender. It can function as "due diligence documentation," both at time of inception of the mortgage and afterwards. In this way, the lender can "hang his hat" on this tool as a defense against lawsuits. We all know that there will be an army of lawyers waiting to test the term "reasonable" in the legislation if a borrower defaults.

Prof. Samuel D. Bornstein
School of Business
Kean University
Union, N.J.

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