"People want to have some green pastures in front of them,� said Mr. McCain, who recently negotiated a couple�s $75,000 home equity debt into a $3,500
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Loyola
Aug 13 '10, 09:14
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settlement.
When houses were doubling in value, mom and pop making $80,000 a year were taking out $300,000 home equity loans for new cars and boats,� said Christopher A. Combs, a real estate lawyer here, where the problem is especially pronounced. �Their chances are pretty good of walking away and not having the bank collect.�
Even when a lender forces a borrower to settle through legal action, it can rarely extract more than 10 cents on the dollar. �People got 90 cents for free,� Mr. Combs said. �It rewards immorality, to some extent.�
Utah Loan Servicing is a debt collector that buys home equity loans from lenders. Clark Terry, the chief executive, says he does not pay more than $500 for a loan, regardless of how big it is.
�Anything over $15,000 to $20,000 is not collectible,� Mr. Terry said. �Americans seem to believe that anything they can get away with is O.K.�
But the borrowers argue that they are simply rebuilding their ravaged lives. Many also say that the banks were predatory, or at least indiscriminate, in making loans, and nevertheless were bailed out by the federal government. Finally, they point to their trump card: they say will declare bankruptcy if a settlement is not on favorable terms.
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