-- 11 July 2007 --

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"The real estate slump here and elsewhere is likely to worsen, given that most of the adjustable rate mortgages written in the last three years will be reset with higher interest rates, said Christopher F. Thornberg, an economist with Beacon Economics in Los Angeles. As a result, borrowers of an estimated $800 billion in loans will be forced in the next 12 months to 18 months to make bigger monthly payments, refinance or sell their homes."

A NY Times editorial the next day showed how borrowers were “steered” in high cost loans and did not benefit by predatory lending practices.

“In a display of too-little, too-late, federal regulators recently tightened lending standards, requiring what should be obvious: that banks have evidence of a borrower’s ability to repay before making a loan. And yet lenders who hope to dodge even tougher oversight continue to defend reckless lending.”

And here’s more info on the mortgage madness:

BILLIONS IN SUBPRIME ARM (ADJUSTABLE RATE MORTGAGES) LOANS WILL BE SUBJECT TO HIGHER PAYMENTS


THE RESISTANCE IS AT THE STATE LEVEL

Congress has all been bought on the issue which is why most of the action is at the State level with more than 30 states considering legislation

Student Loans Remain a big problem:

"WASHINGTON (Reuters) - After months of scandal in the student loan business, a federal regulator said on Monday that recent research revealed a potentially worrisome lack of competing lenders at hundreds of U.S. colleges.

Seventy percent or more of student loans were provided by a single lender at as many as 800 colleges in the last school year, said Jeff Baker, policy liaison at the U.S. Department of Education's federal student aid office."

WHAT CAN BE DONE? – ONE EXAMPLE FROM SOUTH AFRICA

As we rail against and expose abusive credit practices—and my film IN DEBT WE TRUST offers many of the dirty details—we are often hard put to imagine how this problem can be addressed. Americans for Debt Reform Now calls for new regulations. AFFIL, the coalition of organizations campaigning on the issues offers many solutions and demands.

Recently, when I was in South Africa, as a I reported, credit abuses were rife. But as I was leaving, I read about a new National Credit Act that went into effect on July 1. It came about after years of organizing and struggling by a well organized coalition of community groups, labor unions and political activists. In many ways it offers an example of what people can fight for and win.

It was part of a campaign for the reform and transformation of the financial sector which is dominated by four big banks. While it was not successful in all respects—the banks lobbied hard to compromise and water down some key provisions---it is a model in some respects of what we in America might adapt. But like the

The Debt relief movement has its origins in Africa and has mostly dealt with government debt, (In fact, the South has repaid its external debts to the North already.

This is a case of coming up with new rules to restrain abuses of consumers.

Here’s What the National Credit Act Covers:

1. Prevent the reckless lending of credit

2. Preventing South Africans from taking credit without being able to afford it

3. Monitoring of interest rates for all credit lending
4. Customers will be protected by the ACT

5. No more misleading and deceptive marketing by credit lenders will be allowed

Welcome to a step forward in South African history. For more information please go to http://www.nca.org.za or check out the National Credit Act.


As one South African website explains: “The Credit Act is there to prevent people from spending money they don't have. It's there to help the banks manage the massive CREDIT DEBT this country has and it's to stop RECKLESS LENDING of money by the banks. The act puts banks and other lending sources on the spot with possible consequences for them if they found to have advanced loans irresponsibly (responsible lending ACT).

It's all to do with what's known as predatory lending practices and global issue.. here is an easy guide to the new law (pdf).

LEARN ABOUT COLLATERALIZED DEBT OBLIGATIONS

A VOICE FROM INDIA

NDTV: Of Life And 'Debt'
Sanjay Pinto
Bureau Chief (Tamil Nadu)

"Lead me not into temptation, I can find the way myself!" That's probably what a good number of credit card holders in the country now regret doing. But there are many who are forced into this debt trap by glib talking telemarketing agents, with irritatingly artificial accents.

They care two hoots for the Supreme Court's ban on unsolicited marketing calls and take the liberty of disturbing you at odd hours for business on Shylock's terms.

A friend who shuttles between New York and Chennai has a local mobile number for her aged parents to call her. With exasperating regularity, direct selling agents of a dime a dozen private banks call her at what would be the middle of the night in the US with an offer of a credit card or a fresh loan or topping up of a non existent loan….

So that’s my report this week on the world of debt and activism on the issue. You can get involved by signing up on the Stop The Squeeze website, buy and share the film IN DEBT WE TRUST, and participate in the growing movement to stop the squeeze.

Your comments and experiences are welcome. Write: Dissector@mediachannel.org. You can read more of my daily blogs and articles on Mediachannel.org

Please send this newsletter to your friends.

* * *

We are also looking for some donors to support our not-for-profit outreach and educational campaign with tax-deductible donations to:

The Global Center
575 8th Avenue, suite 2200
New York, New York 10018

If you have comments or suggestions, share them with me at dissector@mediachannel.org.

Danny Schechter
Editor Mediachannel.org
Director IN DEBT WE TRUST
InDebtWeTrust.com
212 246-0202x3006

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Reader's response:

Last week we suggested in our weekly tip that the recommended approach to facing your debt is to call the creditors and collectors back.

We got the following response from one of our readers and found it relevant to all:

"I do not agree with your "expert" at all. I don't plan to ever have to deal with a collector again, but if I have to this is what they will hear: 'I DON'T DEAL WITH THIRD PARTY COLLECTORS.' Then the sound of the me hanging up the phone.

I did deal nicely with a collector. I wasn't able to pay the balance on what they said I owed so we arranged monthly payments .
I was kept in the dark for months about interest while they had me believing my balance was going down. When I started asking questions after
they refused to send me invoices like they said they would , they wouldn't tell me how much interest they were charging. According to them I was just supposed to continue sending payments to them . It would have been for life had I continued. I was their cash cow!

When I did find out the truth, my balance wasn't going down. It was increasing! I ended up filing bankruptcy!

It should be against the law for these scum bag crooks to even charge interest on debt they buy for pennies on the dollar. Interest should only be allowed for the pennies they bought the debt for, if that!

Interest is *supposed* to be for money borrowed. Not for these debt buyers who are popping up all over the place deceiving people and frightening people.

I asked my bankruptcy attorney if he thought this collection agency would ever have taken me to court. His answer:
I doubt it. The last person these crooks want to face is a judge!

Congress should look into what the debt buyers are doing.
They should put a stop to this and force companies that sell accounts to these crooks to collect on their own or be satisfied with the tax break they get for charge offs.

So who ya gonna listen to? The "debt expert" or someone who has been there, done that, and been ripped off ! It's your money... "

-- BW

The lesson is - don't trust anyone but yourself. That's why it's so important to educate yourself and take charge of your financials. Only this way you'll be able to tell the crooks from the honest ones...