She was 94 years old.

Sheriff sale of her home was scheduled to take place the following day. When asked why she waited so late to seek help, she explained that she was embarrassed and ashamed. She had taken a home equity loan to pay off debts and for home repairs. A lender recommended contractor never completed the work. On further review, we found that the debts should have been paid out of the proceeds of a previous loan taken only two years prior. None of the debts were paid in either transaction. She left the closing table both times with no money in her hand.

Luckily, though extremely rare, I was able to stop the sheriff sale. Hers turned out to be a case of clear-cut fraud. None of the proper disclosures were made. Prudent lending practices and underwriting guidelines were ignored. Creditors were not paid as promised and we found a host of other violations. By all standards, this was a predatory loan.

Others are not so easily identifiable.

Like the case of Mary's (fictitious name);

she kept receiving mortgage pre-approval solicitations in the mail.

Consolidate.
Get your roof repaired.
Pay off those debts.

Finally, the lure was too great. What a thrill it would be to consolidate her bills and make one payment, she thought. Plus, she'd get to upgrade her electric service. She could run her air conditioners then without the threat of an overload. She filled out the application on one of the solicitations and mailed it in. Surprise! She was approved. Everything from that point began to move quickly. The loan disclosures were sent. They even offered to help her find a contractor. She agreed. A contractor showed up within two days. While he was not an electrical contractor, he had one on staff that would come out the following day. While there, he pointed out other items that she could use.

In the end, she purchased a new kitchen, aluminum siding and, of course, the electrical work. She signed everything and closed the loan in three weeks. The interest rate on the loan was variable, starting at 16.9%. She consolidated a. SBA disaster loan at 3.58%, a fixed rate second mortgage at 9.5% and a credit card at 17.9%. The prevailing rate at the time of her transaction was roughly 8%. Her credit was good; she was eligible for the going rate at that time. In her instance, was fraud committed? We didn't find any.

All terms of the loan were properly disclosed. We found no hidden fees. Was there a relationship between the contractor and the lender? Maybe, but we couldn't establish one. Was the interest rate onerous? Under current law, no.

Was she targeted or was it strategic marketing? Was it a bad consumer choice? Absolutely!

These two cases are real.

The two examples I give show the complexity of the broad range of questions we now face. Defining what should be considered predatory lending and then, figuring out what to do about it is the hot topic of the day. Should we require mandatory counseling before purchasing home equity loans? Should we require new laws and greater disclosure? Should usury rate limits be adjusted? In both examples, intervention would have helped. In the first example, clearly, enforcement of existing laws, perhaps development of new laws and penalties would be in order. In the second example, consumer education is the key. We must work together to find answers to these questions so that we may continue to find ways to protect consumers in these very important transactions.