Crooked Brooklyn Real Estate Developer Pardoned By Bush (Update: Pardon Rescinded!)

To be fair, President Bush doesn't offer many pardons and I'd be surprised if he bested Clinton's list. However, that doesn't mean some of his choices are a smack in the face to the victims of certain lucky criminals' crimes. Isaac Toussie is one of those lucky people, officially pardoned of duping a particularly nasty predatory lender in Brooklyn.

From The NY Daily News:

Bush pardoned Isaac Toussie, 36, two days before Christmas in a gesture of mercy that outraged ex-customers who said they were duped into buying overpriced, defective homes.

"We're in the middle of a mortgage crisis [and] this is somebody who was alleged to have participated in predatory lending practices," said Peter Seidman, a lawyer who represents 460 people who say they were fleeced.

Why would George Bush think to give this scumbag a pass? How is Isaac Toussie, someone hardly connected to the White House and hardly in the news allowed to be pardoned? The guy served five months in prison with no restitution for his many victims. Who knows if he learned anything from that small sentence that equated justice for so many ruined lives. So what gives?

Federal Election Commission records show Toussie's father, Robert, made his first political donation last April - $28,500 to the Republican National Committee.

Ah, yeah, right. It all comes down to someon's sudden interest in helping finance the Republican Party.

Update:

I guess all that bad publicity had an effect on the White House, so they decided to cancel Isaac's pardon...bravo!

Defending Predators?

The NYT Cityroom has a great piece up this afternoon on myths and realities of payday lenders. They highlight two different websites, one an outlet for the industry and another that parodies it. I'm not sure which one does a better job of making me laugh, the one that is trying to be humorous or the industry trying to keep a straight face.

From NYT's Cityroom:

There is a new Web site today, which I’ll get to in a moment. But first you should check out the site it is parodying, from the Community Financial Services Association of America – otherwise known as the Payday Lenders.

On the Myth v. Reality page, you will find:

“Myth: Payday loans are extremely expensive and have exorbitant interest rates.

“Reality: Payday loans are two-week loans — not annual loans! Industry critics quote the “390% annual percentage rate” to misrepresent the truth and to help make their case. The typical fee charged by payday lenders is $15 per $100 borrowed, or a simple 15 percent for a two-week duration. The only way to reach the triple digit APRs quoted by critics is to roll the two-week loan over 26 times (a full year). This is unrealistic considering that many states do not even allow one rollover. In states that do permit rollovers, CFSA members limit rollovers to four or the state limit—whichever is less.”

It then goes on to calculate annual percentage rates for banks charging exorbitant bounced check fees or credit card late fees on a $100 loan or charge. They range up to 1,409 percent. So, it concludes, “the high APR of payday loans pales in comparison to the realistic alternatives considered by consumers.”

I guess the above quote is funny in a sad way. They really try hard to sound believable, even when all of this is coming straight from some marketing professional's ass. The parody site, Predatory Lending Association is more clean cut and direct in their 'predatory analysis.' Be sure to check out the PLA's site, there is so much snarky goodness inside.

Subprime Mortgage Crisis Will Have Dramatic Effect On NYC

In what is shaping up to be the largest fiscal crisis of the new millennium and even worse than the S & L Loan scandal in the early 90s, the sub-prime mortgage crisis is going to hurt our economy on a large scale. New York City is also expected to be walloped by the situation. Overall, the city is looking at over 15,000 foreclosures and now some in the Senate are looking to act.

From The Daily News:

Schumer called for federal action against the lending practices of "really slimy mortgage brokers," which were detailed last Sunday in a special Daily News "I-Team" report.

In a 32-page study, the committee said that nationwide foreclosures were looming on 2 million homes with subprime mortgages, which are granted to borrowers whose credit histories don't rate a conventional mortgage.

The foreclosures and the spinoff effects will cost states more than $103 billion in lost property values - $9.5 billion for New York - and more than $917million in lost property taxes - more than $102 million for New York.

In the city, the borough hit hardest by the subprime crisis was Queens, where foreclosures were started on 2,478 homes through this year and another 3,561 were expected next year for a total of 6,039, the committee report said.

This national crisis will affect millions and because of the impact on the economy, everyone will eventually suffer the consequences. Why the problem was not looked into while the lending was taking place is something that should also be investigated. Of course, the Congress did not conduct any type of oversight while the Republicans were in control, whether it was regarding Iraq or our economy.

It might have been a matter of ignorance, but the fact remains that our government did nothing to stop massive predatory lending practices while interest rates were low a few years back because those mortgages being set up boosted economic figures. That economic "growth" was used by the Bush Administration to show that the economy was strong even though it was all an illusion.

And now we are going to have to pay for that mistake, as we are paying for all of Bush's mistakes.

Combating Predatory Lenders

The problem of predatory lending has been widespread across the country and particularly here in New York. Over 4000 foreclosures that are linked to the practice were discovered in Brooklyn alone. Senator Schumer recently spoke out about the need for change but we need action and not just words. Well the New Yorkers for Responsible Lending have come up with a model bill for the Legislature to enact.

From the DMI Blog:

III. REMEDIES
* The law is enforceable by the NYS Attorney General, Banking Superintendent, or any party to a loan covered by the law.
* Actual and statutory damages may be awarded; statutory damages shall be $5,000 per violation or two times actual damages (whichever is greater). Injunctive relief to stop unlawful practices, as well as declaratory and other equitable relief as the court deems appropriate, may be granted. The court may award reasonable attorneys' fees to a prevailing borrower.
* The loan transaction may be rescinded if the lender is found to have violated prohibitions against making unaffordable loans and/or negative amortization loans.
* Borrowers may assert defenses against loan purchasers ("assignees") that they could assert against the original lender.
* The law includes good faith exceptions. No violation of the law shall be found if the lender:
* Notifies the borrower of the compliance error and provides and an opportunity to cure, within 30 days of making the loan; or
* Can show that it failed to comply with the law because of bona fide error.

And those are just the remedies, click on the link for the full list of what the bill would do. Now the only thing is to get the bill into action and passed by our Legislature. Will New York's Statehouse do what is necessary to help it's citizens that have been victimized by predatory lenders? Time will only tell. So make sure to let your own representative know how important this issue is.

Spitzer To Get Tough On Predatory Lenders

Frankly, this is a problem that should have been fixed long before Spitzer took office. It wasn't hard to see that sub-prime lenders were going to swoop into low-income areas and take advantage of low interest rates and unsuspecting borrowers. At least our new Governor is going to do something about the terrible practice of predatory lending.

From Crain's New York Business:

New York state Gov. Eliot Spitzer on Friday announced an interagency task force aimed at combating predatory lending practices throughout the state.

The task force -- Halt Abusive Lending Transactions -- is designed to help the public handle questionable lending practices in the subprime market, and to make it easier for low-income families to buy new homes.

"Lending practices that prey upon the public cannot and will not be tolerated," Mr. Spitzer said in a statement. "This task force will take a comprehensive look at the sub-prime lending industry, and recommend steps to protect borrowers, particularly minorities and the elderly.

The city alone is facing 15,000 foreclosures, ruining many families that were tricked into what they thought was a low interest loan. Now as payments soar higher and higher, people cannot afford to live in their homes anymore. Hopefully the Governor and AG Cuomo can do something about this escalating problem.