In the bankruptcy practice where I work, I am seeing an increasing number clients caught in financial binds caused by usurious home loans. Oregon has an explicit exception to the statutes limiting interest and fees charged on loans set forth in ORS 82.010(4). On the other hand, there are many state and federal statutes including RESPA and HOEPA which have provisions either restricting loan terms or requiring lenders to be explicit when disclosing the costs of a loan. When examining loan documents I sometimes find clear violations of existing laws, but far more often what surfaces is a contract which is legal, but unconscionable.
Usury, once associated with organized crime, has become institutionalized in credit-card lending, subprime home loans, and, increasingly, private student loans. Home loans and easy credit have driven the economy for the last decade, generating obscene profits for banks and lending institutions. Congress, meanwhile, adopted a laissez-faire attitude. If it wasn’t obviously broken, no-one wanted to expend effort to fix it. (more…)