Predatory Practices in financial borrowing and lending contracts Research Paper

Predatory Practices in financial borrowing and lending contracts - Research Paper Example Predatory Practices in financial borrowing and lending contracts The following are some of the characteristics of predatory practices in money lending. First, those targeted are chiefly the low income people and the elderly in society. Second, the loans’ costs and terms often change at the closing and differ greatly from what they were at the beginning or what was agreed. Predatory practices are also often accompanied by aggressive sale approaches. There are also repeated re-financing options after a short time lapse so that lenders end up collecting addition fee or penalties, consequently denying borrowers such as home owners the equities from their security. Notably, in most of predatory lending practices, the lending is not often in line with the borrower’s capacity to repay since the lender’s center of attention is often the foreclosure. In addition, the vulnerable borrower is always unaware of the underlying truths of the truth, terms, conditions, and consequences of the deal (â€Å"Predatory Lending† 4). That is, there is always quite a lot of misunderstanding about the nature of loan and the amount to be repaid since such transactions has high but hidden fees that could be hidden from the borrower’s eyes. The borrowers are often tricked by the aggressive sales. Most affected in this regard are uninformed groups, which end up borrowing under unfair loan terms. Due to the harmful effects of such loans to society, the government has numerous remedies in form of laws and regulations. These remedies include the Equal Credit Opportunity Act (ECOA), the Real Estate Settlement Procedures Act (RESPA), the Home Ownership and Equity Protection Act (HOEPA), and the Truth in Lending Act (TILA). Others are the Fair Housing Act, and the Federal Trade Commission Act, and Special State Anti-predatory Lending Statutes, in State Unfair and Deceptive Trade Practices Acts, and common law fraud and unconscionability. This paper explores some of the predatory practices in lending, pointing out and explaini ng the parties’ responsibilities. Predatory Practices Predatory lending practices are not only unfair but also fraudulent and deceptive. In other terms, predatory lending entails the imposition of abusive and unfair terms on loans for borrowers. In fact, the phrase ‘predatory lending† generally refers to many specific illegal activities in the loan sector. Nonetheless, different states have various laws against each specific type of illegal loan activity. Notice should be taken about the distinction between predatory lending and predatory mortgage servicing. The latter refers to the deceptive, fraudulent, and unjust practices of lenders and servicing agents in loan or mortgage servicing processes. Unlike predatory lending, this latter activity takes place post loan origination. An example of a predatory practice is that of a lender deceptively convincing a potential borrower to accept an unfair and abusive loan term (Nasiripour 122). Second, a lender may methodica lly breach the terms so that the borrower finds it hard to defend against it (Aleo and Svirsky 119). These predatory practices may be done through certain types of  credit cards, largely  subprime, payday loans, and overdraft loans. In all these cases, the lender may set the interest rates at considerably and unreasonably high levels. Mostly targeted by predatory loan lenders are borrowers with some collateral to back their loan requests. This collateral could be a car or a house, which the

Finance and Public Administrators Research Paper

Finance and Public Administrators - Research Paper Example There are also a number of roads that need to be repaired and the plan is to start with the ones that have the greatest need. In addition to those capital requirements the expenses relating to the day to day operations of the city needs to be taken into account. Non-profit organizations play a useful role in the city and so a certain level of funding is normally made available to them so that they can continue to achieve their goals. The Budget According to Horngren et al (2000, p. 178 -180), a budget is the financial plan of an organization which is communicated in quantitative terms. It forms a blueprint for management to follow in an upcoming period and outlines the operational goals for a specific period of time. It states where financial resources will come from and what they will be used for. Planning is achieved through the budgeting process and forms the basis for decisions made by management. Horngren further states that budgets represent a major aspect management control sy stems. As long as they are administered in an appropriate manner they have the following characteristics. they compel planning they provide criteria for performance; and they promote the coordination and communication of activities in the organization. Planning is a major function of the budget as it seeks to quantify the plan. The plan specifies the type, quantity and quality of services that will be provided, estimating the costs and deciding how they will be paid for. The Council prepares the estimates of income than will be generated from various services provided at a cost by the city. These services include and are not limited to transportation, water and sewage. Other income generators include property tax and corporation tax, and income tax. The expenditure includes both capital and current expenditures. The performance criteria are useful both for staff and for sub-contractors who perform jobs in the city. They set the standard for achieving the goals and objectives of the departments. In coordinating and communicating the plan all the management personnel in these departments coordinate the tasks for their subordinates so that the goals of Council will be achieved. The objectives of the departments are communicated in such a way that they are clearly understood by employees. Controlling and administering the budget helps to ensure that resources are obtained and expended based on plans. Budgets are used to monitor the flow of resources to ensure that they are used as intended and that there are no significant over-runs. According to Chan (2009) the annual budget prepared in the public sector is not only a planning document but also includes projections of revenue collection as the law authorizes well as information on expenditure that has been proposed by executives and approved by the legislature. This implies that the budget is used as tool for management control as well legislative oversight. Any transactions and activities undertaken have to be i n keeping with the budget. Chan (2009) indicates that this type of accounting is described as management accounting in business and budgetary accounting in the public sector. It is in this same way that the City Council will go about controlling and managing public funds. Table 2 shows a summary version of the city’s budget for the fiscal year ending 31st March 2012. Summary of Budgeted Expenditure for the Fiscal Year Ending 31 March 2012 Budget Allocation/Revenue $10,000,0000