OpinionIndustry News

The arrest of predatory lending

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In the past few weeks the American public has been made aware of an unprecedented number of individuals who are defaulting on their home loans. Many of these loans are considered "subprime," which means that they deviate in some important aspect from what is arguably fair. For example, they could include prepayment penalties, balloon payments or unmanageable interest rates. Many of these loans will go into foreclosure and a number of individuals will thereby lose home ownership. We can understand why this is happening from the perspective of professional ethics. Typically, a professional is someone with specialized knowledge and a certification of substantive competency, along with a pledge to a written code of ethics within the industry. Some examples of professionals are medical doctors, lawyers, CPAs and Realtors. Furthermore, the typical standard of practice of a professional is at the level of a fiduciary duty. This requires the highest standards of good faith and fair dealing, a...