Banks prey on young and old

Big bank predatory lending practices that played a major part in causing the current financial crisis have been widely publicized.

The good news is the lending industry has been forced to institute more realistic mortgage underwriting practices.

The bad news is the same vultures are socking it to senior citizens with reverse mortgages and victimizing the young with collegiate credit cards.

Banks and credit card companies frequently partner with universities to aggressively market cards to college students regardless of ability to pay. These co-branded cards have annual fees and high interest rates resulting in huge profits for banks and millions of dollars to universities.

It begins with the placement of marketing booths or tables in strategic locations around campus. Free gifts such as t-shirts, Frisbees or even pizza are offered to students who complete a credit card application. Bingo, the trap is set!

Credit underwriting standards are almost non-existent and inexperienced kids sometimes begin using credit without any thought of how the bill will be paid.

A recent study by Sallie Mae concluded that half of college students have four or more credit cards and 82 per cent carry balances that incur finance charges. Seniors graduate with an average credit card debt of $4,100.

We are putting a generation of college graduates with excessive student loan obligations and significant credit card debt into a society where there are few jobs. Young people deserve better.

The collegiate credit card problem was partially solved by recent legislation passed by Congress. It prohibits gifts in exchange for completing credit card applications. The new law also prohibits banks from issuing credit cards to youngsters under 21 unless parents co-sign or the applicant can document sufficient income to handle the debt. These are steps in the right direction.

The same money changers are again circling the prey, and this time it is senior citizens. Bank insiders see reverse mortgages for seniors as one of their most lucrative profit centers during the baby boomer retirement era.

What is a reverse mortgage? It is a lending program for seniors with high equity in their homes or who own the property free and clear. It permits the borrower to take a lump sum payment or receive monthly payments while still owning and living in the home.

Slick advertising campaigns put reverse mortgages at the same level as motherhood and apple pie when they are actually dangerous programs for the elderly. Interest rates are high and closing costs can exceed 14 percent. The maximum loan to value ratio is typically 50 percent, which eliminates almost all risk to the lender and puts the senior homeowner in jeopardy.

The interest clock runs continually and interest is added to the loan obligation and compounded. It is a “rising debt, lowering equity” trap that has been carefully baited. The borrower typically owes about four times the original loan amount after 20 years.

Reverse mortgages have to be paid off when the owner dies, sells the home, moves to assisted living or even into a relative’s home.

Lenders typically give seniors or their heirs one year to sell the home before foreclosure. This can be upsetting to those moving into nursing homes or assisted living. Such relocations are traumatic enough without the added burden of worrying about disposition of personal belongings and furniture. The vultures who offer the program are virtually stealing the past from seniors. It is time for Congress to step in and regulate.

I have a few random and unrelated thoughts to share with readers:

• The manager of the Georgia Lottery received a $204,000 bonus in addition to her $286,000 salary in 2009. Other highly paid Georgia Lottery officials split another $2.5 million in bonuses.

Their compensation is an outrage and legislation governing the Lottery Corporation should be amended to get salaries and bonuses in line with reality. I hope Senator Ronnie Chance and Representatives Matt Ramsey and Virgil Fludd are listening.

• There is a troubling report that Georgia’s October revenue was down 18 percent from the previous year, and corporate income tax revenue was negative in October.

The General Assembly will have to reduce salaries and lay off more teachers and state employees in 2011. The furlough plan wasn’t enough to solve the problem.

• The Rockdale and Cobb County school systems are recognized for their excellent instruction and good financial management. These two school systems are completely debt-free because both used past SPLOST proceeds to eliminate bonded indebtedness.

The Fayette School System measures up quite well in academics but receives an F in financial management. The board has raised the education millage levy to the maximum allowed by state law and is pouring SPLOST money into operations while applying a meager sum to debt service.

It appears the system will go deeper in debt over the next three years. It is time for the board to wake up and face the problem.

• November election results sent a mixed message to politicians. Continuation of the SPLOST was voted down by a wide margin. Yet, Peachtree City voters rejected Shelby Barker and David Craig, who were the most outspoken opponents of the SPLOST. Most Peachtree City Council candidates who made the runoff supported the SPLOST. Eric Imker is the only exception that I can recall.

Grace Caldwell lost her council post in Tyrone reportedly because her voting record was inconsistent with campaign promises. Folks in the city of Fayetteville expressed happiness with the state of the city by re-electing incumbents.

I hope the Peachtree City runoff election will result in a larger turnout and a clearer message from voters.

I find it difficult to separate the sheep from the goats in these races. The candidates all say they support the land use plan, oppose Callula Hill, support the village concept, waffle on annexation and most of them will not completely rule out tax increases. They are similar in many ways.

The key to this election is the unspoken and largely ignored issue of residential, commercial and industrial growth. We have races for mayor and council between a slate of no-growth candidates who want to close the door to outsiders versus slow-growth candidates who recognize the need for new business and industry to prevent continued erosion of the tax base.

Enough said!

[Scott Bradshaw, a resident of Peachtree City, is a real estate broker and residential real estate developer. He may be contacted at]

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Spear Road Guy's picture
Submitted by Spear Road Guy on Tue, 11/17/2009 - 11:09pm.

I didn't vote for Shelby Barker because he's a kid. We didn't need another Dan Tennant, a smart alec grandstander. And who in the heck is the Craig guy?

The SPLOST was simply. Don't vote for stupid stuff in a recession.

No mixed message there.

Vote Republican

Submitted by totellthetruth on Tue, 11/17/2009 - 10:56pm.

Seems like there was a resounding yes for the controlled growth candidate, the mayor race for PTC in which Haddix won every precinct and only needed a few more votes to secure a win in a three way race.

Flogging for Cyndi ain't gonna guarantee the almighty annexation of your land into PTC. We the voters are smart enough not to let that happen!

mudcat's picture
Submitted by mudcat on Tue, 11/17/2009 - 7:58pm.

I'll help you with that, bro,

You said "I find it difficult to separate the sheep from the goats in these races."

Here's the deal, sheep are female, goats are male. What you want to do is vote for the females this time, Cyndi, Beth and Kim. Then they will work with the goat (I think his name is Doug) to do whatever needs to be done. OK with you?

Submitted by MYTMITE on Tue, 11/17/2009 - 11:00pm.

Guess they were wrong all these years the ewes and rams thought they were female and male sheep respectively. A goat is akin to the sheep but is smaller. Take thee to a farm and get a lesson---"Boy sheep and girl sheep--go to 'bed' but not to sleep. Female goats and manly goats get together to sow wild oats." Keep repeating that over and over til you've got it. I am sure there are some in each group that may be attracted to their own sex (as seems to happen in all species) but they would not be able to make marry or adopt in many states.

Now I am really beginning to wonder about the all female council you have been touting. LOL

mudcat's picture
Submitted by mudcat on Wed, 11/18/2009 - 7:45am.

Makes me uncomfortable.

I on the other hand, was just taking editorial liberty to get to my central theme - all all female election sweep. I still think that is the best thing to happen to the city.

Submitted by MYTMITE on Wed, 11/18/2009 - 12:41pm.

You do know the difference between girls and boys don't you? Wouldn't want you to get to the polls and vote for one of the guys by mistake! Editorial liberty my foot!! If your sideways thinking bleeds over into your other thought processes that is enough reason for me not to be swayed to your all female slate (plus the many, many other reasons that that idea is just too wrong). If you have a problem in the future remembering which is which re:goat vs sheep, just remember: Bonkers is an old goat, all the others that would following along with your all female slate for no reason other than they are female--they are the sheep.

Submitted by MYTMITE on Tue, 11/17/2009 - 5:31pm.

post?? Don't think she stands a chance and sure hope people remember her true voting record and not the baloney she is trying to pass off now. The everyday people in PTC shoul be smart enough not to fall for all this last minute garbage and remember her voting record.

Submitted by GAltant on Thu, 11/19/2009 - 8:12am.

I am so glad I live in the United States where freedom of speech is allowed.
The problem is posting on this blog because MYTMITE appears to stalk and attack people who have different viewpoints especially when it comes to this election.
MYTMITE - Please stop - its wrong, it's unfair, it's unconstitutional.
I am glad you are passionate about the issues and your support your candidate but don't stalk and attack did it to me and it appears you do it to others.
Thank you

Submitted by MYTMITE on Thu, 11/19/2009 - 1:04pm.

country is that it applies to everyone. You post your views and you respond to any blogs you choose, as you have to mine. I do the same. That is quite a charge to make that I am stalking and attacking people who have different viewpoints. Tell me where in our constitution it says it is unconstitutional to reply to a blog? I must have missed that civics class--or is this an amendment you have added? I, as do others, on both sides of the election and other subjects that come up here express their opinions. It comes at no surprise to me that there are those people who are ready to cry foul when someone calls them on something they have said and posted because it goes against their point of view--or maybe because it hits home. Over the course of time I have taken a drubbing from some here but I hitch up my britches and take it on the chin, like my mama taught me. I will continue to voice my opinion and reply to blogs I choose until I am told by the paper that I have overstepped their rules and regulations. If you don't want to read or reply to my blogs, that is fine---after all as you said we have freedom of speech. Thank goodness we also have the freedom to make out own decisions. Is this a great country or what?

Mike King's picture
Submitted by Mike King on Tue, 11/17/2009 - 4:58pm. accomplish what you so elequently point out, they had to have allies in public office at the state, federal, and local levels. Laws would never have passed to their benefit if the interest of our electorate was to the citizenry first.

I take exception with your view of mixed messages on SPLOST, to me it was clear. Voters expect representatives to manage THEIR funds wisely and not as an infinite reservoir of money to fritter away as they see fit.

Submitted by PTCGOIL on Tue, 11/17/2009 - 4:42pm.

'Nuff said.

Spear Road Guy's picture
Submitted by Spear Road Guy on Tue, 11/17/2009 - 11:12pm.

Thanks PTCGOIL!!! Oh yeah, 'nuff said.

Vote Republican

Submitted by totellthetruth on Wed, 11/18/2009 - 10:38pm.

Why would Cyndi Plunkett need to have a political consultant for the mayoral race in PTC? What is it she has to lose? Why would an incumbent with a 4 year voting record need to hire somone to run her campaign? What does she have to hide? Does this strike anyone else as strange?

I am just amazed at how people will vote for Cyndi as if they were voting for the high school homecoming queen. The mayoral race is more than a popularity contest. Wake up people, get to know the issues and figure out what kind of progress you want for PTC. If you don't want 4 more years of the same poop flying around, then get out and vote. Send Cyndi (Logsdon in a skirt) a strong message....kick her can out of office!

Submitted by PTCGOIL on Thu, 11/19/2009 - 8:24am.

Is that a movie title?...Anyways, was I the only one who thought she was becoming a little unglued? Waving that sheet of paper all over the place? What did that accomplish? And, let me tell you, there isn't an oil company or gas company anywhere that will ever give her a penny of their special interest campaign contributions. No sirree, she told them what she thought of them, for sure!

And what were the references to her veterinarian about? More than once she brought him/her up. I think she got confused with the pit bull biting issue at Council meeting, maybe. Calmer heads can easily lead our city, and I now know Don Haddix has what it takes to be called Mayor for the next 4 years. Cyndi needs a vacation, badly, and a break from justifying her actions for the last 4 years.

gelato's picture
Submitted by gelato on Thu, 11/19/2009 - 6:54am.

You had me in stitches this morning, since your analogy of Plunkett being Logsdon in a skirt is right on target. Very good! Please people of Bubbleland, wake up and smell the cloning. 4 years of Cyndi = 4 more years of Harold = YUK.

Submitted by Citizen_Steve on Tue, 11/17/2009 - 5:39pm.

Yes and I think he has one thing wrong - it is not about growth per se, it is about maintaining our quality of living. If we re-elect those such as Plunkett who voted to give up city land for shopping center development, our real estate values will surely decrease as will our quality of living.

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