The life and debt cycle: The growing debt burdens of older consumers and related policy recommendations

Harvard Journal on Legislation

Volumn 44, Issue 1, 2007, Pages 167-203

  Loonin, Deanne ^a   Renuart, Elizabeth ^a  

^a National Consumer Law Center   (United States)

Author keywords

[No Author keywords available]

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EID: 34247621881     PISSN: 0017808X     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Conference Paper

References (270)

1. ROBERT D. MANNING, CREDIT CARD NATION: THE CONSEQUENCES OF AMERICA'S ADDICTION TO CREDIT 257 (2000) (coining the phrase "aging into debt"). The terms "elders," "older consumers," and "seniors" are used interchangeably throughout this Article. Unless otherwise indicated, the terms refer to individuals age sixty or older.
2. See infra Part II.B.
3. See infra note 10 and accompanying text.
4. See infra note 31 and accompanying text.
5. See infra Part II.C.4.
6. See infra note 10 and accompanying text.
7. See U.S. CENSUS BUREAU, TABLE 2B: PROJECTED POPULATION CHANGE IN THE UNITED STATES, BY AGE AND SEX: 2000 TO 2050, available at http://www.census.gov/ipc/ www/usinterimproj/natpro jtab02b.pdf (projecting that between 2000 and 2050 the number of people aged sixty-five to eighty-four will increase by 113.8%).
8. "See infra Part II,B.
9. See MANNING, supra note 1, at 262-63.
10. See Teresa A. Sullivan et al., Young, Old, and in Between: Who Files for Bankruptcy?, 9 NORTON BANKR. L. ADVISOR 1, 5 (2001) (reporting that the number of older consumers filing for bankruptcy more than doubled between 1992 and 2001);
11. see also INST. FOR FIN. LITERACY, FIRST DEMOGRAPHIC ANALYSIS OF POST-BAPCPA DEBTORS 5 (2006), available at http://www.financiallit.org/news/ white/2006-04-16%20First%20Demographic%20Analysis %20of%20 Post%20v.2.pdf (finding that more than 20% of consumers seeking mandatory prebankruptcy counseling were over age fifty-five).
12. HEATHER C. MCGHEE & TAMARA DRAUT, DEMOS: A NETWORK FOR IDEAS AND ACTION, RETIRING IN THE RED: THE GROWTH OF DEBT AMONG OLDER AMERICANS 3 (2005), available at http://www.demos.org/pu bs/Retiring_2ed.pdf.
13. See id.
14. See infra note 32 and accompanying text.
15. See infra Part II.C.
16. See, e.g., Tide of Debt is Rising for the Elderly; Medical Costs High; Pensions Meager, CHI. TRIB., July 8, 2004, at C3 (describing the situation of an eighty-four-year-old widowed retiree who lost her full-time nursing position, could find only short-term jobs, and was struggling to pay back about $11,000 in credit card debt);
17. Suein L. Hwang, Family Finance: More Seniors Are Piling Up Debt, WALL ST. J., Feb. 18, 2004, at D2 (relating the story of an eighty-six-year-old former Wal-Mart employee who filed for bankruptcy after running up $83,000 in debt on twelve credit cards).
18. See generally DEANNE LOONIN & JOHN RAO, NAT'L CONSUMER LAW CTR., GUIDE TO SURVIVING DEBT (2006).
19. See generally JOHN GIST & CARLOS FIGUEIREDO, AARP, DEEPER IN DEBT: TRENDS AMONG MIDLIFE AND OLDER AMERICANS (2002), available at http://www.aarp.org/research/ credit-debt/debt/aresearch- import-339-DD70.html (describing elders' increasing "debt burdens," or the percentage of income spent paying off debt). Moreover, the fewer private resources elders have available to pay expenses as they grow older, the more society has to pay to keep its older citizens from suffering and doing without basic necessities of life.
20. See Peter G. Peterson, Gray Dawn: The Global Aging Crisis, 78 FOREIGN AFF. 42, 46-47 (1999).
21. See, e.g., Patricia Drentea & Paul J. Lavrakas, Over The Limit: The Association Among Health, Race and Debt, 50 SOC. SCI. & MED. 517, 522-23, 526-27 (2000) (suggesting that high credit card debt-to-income ratios may be significantly correlated with poor physical health);
22. Barbara O'Neill et al., Financially Distressed Consumers: Their Financial Practices, Financial Well-Being, and Health, 16 FIN. COUNSELING & PLANNING 73, 83 (2005) (same).
23. CTR. FOR RESPONSIBLE LENDING & DEMOS, A NETWORK FOR IDEAS AND ACTION, THE PLASTIC SAFETY NET: THE REALITY BEHIND DEBT IN AMERICA 12 (2005), available at http://www.responsiblel ending.org/pdfs/DEMOS-101205.pdf (reporting that seven out of ten low- to middle-income households rely on credit cards as a safety net to pay for car repairs, basic living expenses, medical expenses or house repairs).
24. See, e.g., BD. OF GOVERNORS OF THE FED. RESERVE SYS., REPORT TO THE CONGRESS ON PRACTICES OF THE CONSUMER CREDIT INDUSTRY IN SOLICITING AND EXTENDING CREDIT AND THEIR EFFECTS ON CONSUMER DEBT AND INSOLVENCY 16 (2006), available at http:// www.federalreserve.gov/boarddocs/ rptcongresstoaiucruptcy/bankmptcybillstudy200606.pdf.
25. See AARP, BEYOND 50.04: A REPORT TO THE NATION ON CONSUMERS IN THE MARKETPLACE 31 (2004), available at http://assets. aarp.org/rgcenter/consume/beyond_50_cons. pdf.
26. See Annamaria Lusardi & Olivia S. Mitchell, Financial Literacy and Planning: Implications for Retirement Wellbeing 3 (Univ. of Mich. Retirement Research Ctr., Working Paper No. 2005-108, 2005), available at http://www.mrrc.isr.umich.edu/publications/papers/ pdfAvpl08.pdf (finding that "financial illiteracy is widespread among older Americans");
27. see also NAT'L CTR. FOR EDUC. STATISTICS, NAT'L ASSESSMENT OF ADULT LITERACY: A FIRST LOOK AT THE LITERACY OF AMERICA'S ADULTS IN THE 21ST CENTURY, NCES 2006470, at 10 (2005), available at http://nces.ed.gov/naal/pdf/2006470. pdf (finding that adults age sixty-five and older had the lowest "quantitative" literacy rate of any age group in 2003).
28. See CARMEN DENAVAS-WALT ET AL., U.S. CENSUS BUREAU, INCOME, POVERTY, AND HEALTH INSURANCE COVERAGE IN THE UNITED STATES: 2004, at 4 (2005) (reporting that the 2004 median income for elder-headed households was $24,509, compared with $50,923 for households headed by persons under age sixty-five). Furthermore, while median family incomes adjusted for inflation grew more than 10% over the past decade, incomes for those age fifty and older were actually lower in 2003 than in 1999.
29. See AARP, THE STATE OF 50+ AMERICA 1 (2005), available at http://assets.aarp.org/rgcenter/econ/fif ty_plus_2005.pdf [hereinafter AARP, THE STATE OF 50+ AMERICA].
30. See DENAVAS-WALT ET AL., supra note 23, at 10 (reporting that the poverty rate in 2004 was 12.7% for all people and families in the United States but only 9.8% for those age sixty-five and older).
31. See ARLOC SHERMAN & ISAAC SHAPIRO, CTR. ON BUDGET AND POLICY PRIORITIES, SOCIAL SECURITY LIFTS 13 MILLION SENIORS ABOVE THE POVERTY LINE: A STATE-BYSTATE ANALYSIS 1 (2005), available at http://www.cbpp.org/2-24-05socsec.pdf ("[L]eaving aside Social Security income, nearly one of every two elderly people ... has income below the poverty line.").
32. See AARP, THE STATE OF 50+ AMERICA, supra note 23, at 7.
33. See CONG. BUDGET OFFICE, THE OUTLOOK FOR SOCIAL SECURITY 1 (2004), available at http://www.cbo.gov/showdoc.cfm?index=5530&sequence=l&frorn=0 (predicting that scheduled Social Security benefits may be reduced because outlays are growing faster than revenues, creating "significant annual deficits in the system").
34. See AARP, THE STATE OF 50+ AMERICA, supra note 23, at 7 (reporting that pension income has stagnated, experiencing only a slight net increase over the last two decades and leaving more than half of seniors without coverage).
35. See U.S. CENSUS BUREAU, 65+ IN THE UNITED STATES 35-36 (2005), available at http://www.census.gov/prod/2006p ubs/p23-209.pdf (reporting that remaining life expectancy for sixty-five-year-olds had increased from twelve years in 1900 to eighteen years in 2000).
36. See BARBARA A. BUTRICA ET AL., CTR. FOR RET. RESEARCH AT BOSTON COLL., UNDERSTANDING EXPENDITURE PATTERNS IN RETIREMENT 13 (2005), available at http://www. bc.edu/centers/crr/pa pers/wp_2005-03.pdf.
37. U.S. CENSUS BUREAU, AMERICAN HOUSING SURVEY 58 (2005) available at http:// www.census.gov/prod/ 2006pubs/hl50 -05.pdf. The disproportionately high level of homeownership among elders persists for the lowest income households as well.
38. See id. at 58, 430 (reporting that in 2005 the homeownership rate for elders living below the federal poverty line was 63.3%, compared with 42.6% for all American households below the poverty line).
39. See, e.g., GEORGE S. MASNICK ET AL., JOINT CTR. FOR HOUS. STUDIES, HARVARD UNIV., EMERGING COHORT TRENDS IN HOUSING DEBT AND HOME EQUITY 1, 3 (2005), available at http://www.jchs.harvard.edu/publications/finance/ w05-1 .pdf.
40. See WILLIAM C. APGAR & ZHU XIAO DI, JOINT CTR. FOR HOUS. STUDIES, HARVARD UNIV., HOUSING WEALTH AND RETIREMENT SAVINGS: ENHANCING FINANCIAL SECURITY FOR OLDER AMERICANS 4-5 (2005), available at http://www.jchs.harvard.edu/publications/finance/ w05-8.pdf (reporting that only 41.1% of owner households with heads aged fiftyfive to sixty-four had paid off their mortgages in 2001, compared with 53.8% of their sameage counterparts in 1989).
41. Jennifer Bayot, As Bills Mount, Debts on Homes Rise for Elderly, N.Y. TIMES, July 4, 2004, §l, at 1.
42. APGAR & Di, supra note 33, at 7. Although mortgage debt rose for homeowners of all ages during this period, it did so at a significantly slower pace.
43. See id. at 4-5.
44. See AARP, THE STATE OF 50+ AMERICA, supra note 23, at 40. Even seniors with health insurance are not insulated from medical debt problems; in the 2004 AARP survey, 24% of those with Medicare and 13% of those with other coverage reported difficulty paying medical bills.
45. See id.
46. ADMIN. ON AGING, U.S. DEP'T OF HEALTH AND HUMAN SERVS., A PROFILE OF OLDER AMERICANS: 2003, at 13 (2003), available at http://www.aoa.gov/ prof/Statistics/profile/2003/ 2003profile.pdf.
47. AARP, THE STATE OF 50+ AMERICA, supra note 23, at 40.
48. See MCGHEE & DRAUT, supra note 11, at 6.
49. See Robert W. Seifert, The Demand Side of Financial Exploitation: The Case of Medical Debt, 15 HOUSING POL'Y DEBATE 785, 786 (2004) (postulating that the level of medical debt can be used as an indicator of the demand for predatory financial services);
50. see also infra Part II.C.
51. See The Impact of Energy Prices on Older Americans: Hearing Before the S. Spec. Comm. on Aging, 109th Cong. 28-40 (2005) (statement of Nelda Barnett, Member, AARP Board of Directors) [hereinafter Barnett Statement];
52. BUTRICA ET AL., supra note 30, at 17 (citing a study of consumption patterns after retirement that found utilities represent the largest spending category, outweighing property taxes, mortgage payments and housing maintenance, insurance, and rent).
53. Barnett Statement, supra note 41, at 32-34.
54. See FREDDIE MAC, CONVENTIONAL MORTGAGE HOME PRICE INDEX: Q3 2000 RELEASE, available at http://www.freddiemac.com/finance/cmhpi/ past/2000/q3/census9.xls (reporting that housing prices increased 29.7% between 1995 and 2000);
55. FREDDIE MAC, CONVENTIONAL MORTGAGE HOME PRICE INDEX: Q3 2005 RELEASE, available at http://www. freddiemac.com/finance/cmhpi/past/2005/q3/ census9.xls (reporting that housing prices increased 55.2% between 2000 and 2005).
56. See MICHAEL LORELLI, TAX FOUND., SPECIAL REPORT: STATE AND LOCAL PROPERTY TAXES 3 (2001), available at http://www.taxfoundation.org/publications/show/136.html (stating that between 1980 and 2001 state and local property taxes increased at an average annual rate of 3.2%).
57. See U.S. CENSUS BUREAU, TABLE 1: NATIONAL TOTALS OF STATE AND LOCAL TAX REVENUE, BY TYPE OF TAX (2006), available at http://ftp2.census.gov/govs/qtax/tablel.xls (reporting that between the beginning of 2001 and the close of 2004, state and local property tax revenue rose 32.5%).
58. See LORELLI, supra note 44, at 3 (noting that the combination of the rapid rise in home values and regressive property taxes have pushed up tax burdens "without regard to 'ability to pay'").
59. See U.S. CENSUS BUREAU, supra note 31, at 430.
60. See, e.g., Robert C. Christopherson, Missing the Forest for the Trees: The Illusory Half-Policy of Senior Citizen Property Tax Relief, 13 ELDER L.J. 195, 201 (2005) (describing an elderly Massachusetts woman with only $12,000 in annual income who was struggling to pay property taxes on a house that had increased in value from $173,000 to $289,000 between 1996 and 2003);
61. Yilu Zhao, Rising Home Values Creating a Tax Bind for Elderly in U.S., INT'L HERALD TRIE., May 1, 2003, at 3 (reporting that a retired Connecticut couple with a fixed annual income of $18,000 had difficulty paying their $5,100 annual property tax on a house which had increased in value from $200,000 in 1995 to $380,000 in 2002).
62. FED. RESERVE BD., FEDERAL RESERVE STATISTICAL RELEASE, G.19 CONSUMER CREDIT AUGUST 2006, at 1 (2006), available at http://www.federalreserve.gov/releases/gl9/current.
63. 38 Cong. Ch. 106, 13 Stat. 99 (1864) (codified in scattered sections of 12 U.S.C.).
64. Currently, the interest rate caps are the higher of (1) the "interest rate allowed by the laws of the State ... where the bank is located" or (2) 1% above the discount rate on ninety-day commercial paper in effect at the Federal Reserve bank in the district where the bank is located. See 12 U.S.C. §85 (2000).
65. 12 U.S.C. §§1461-68 (2000).
66. See id. §1463(g) (2000).
67. See Margot Saunders & Alys Cohen, Federal Protection or Consumer Credit; The Cause or the Cure for Predatory Lending? 4-8 (Harvard Univ. Joint Ctr. for Hous. Studies, Working Paper Series, Paper No. BABC 04-21, 2004), available at http://www.jchs.harvard. edu/publications/finance/ babc/babc_04-21.pdf (discussing the history of usury as well as the forces that pushed states to at least partially deregulate interest rates).
68. 439 U.S. 299(1978).
69. See id. at 313-14;
70. ELIZABETH RENUART & KATHLEEN E. KEEST, THE COST OF CREDIT: REGULATION, PREEMPTION, AND INDUSTRY ABUSES §3.4.5.1 (2004 & Supp. 2006) (defining the Marquette "exportation doctrine" as permitting a bank chartered in one state to apply that state's usury laws when making loans in other states).
71. Pub. L. No. 96-221, 94 Stat. 132 (1980) (codified in scattered sections of 12 U.S.C.).
72. 12 U.S.C. §§ 3801-04(2000).
73. See 12 U.S.C. §1735f-7a(a)(l).
74. See 12 U.S.C. §§ 3802-03.
75. See Cathy Lesser Mansfield, The Road to Subprime "Hel" Was Paved with Good Congressional Intentions: Usury Deregulation and the Subprime Home Equity Market, 51 S.C. L. Rev. 473, 527-32 (2000) (discussing the rise of the predatory subprime mortgage market as a result of the freedom allowed by the first lien preemptions in both AMTPA and DIDMCA).
76. A balloon payment is a large payment that comes due during (usually at the end of) the loan term. See DEANNE LOONIN & JOHN RAO, NAT'L CONSUMER LAW CTR., GUIDE TO SURVIVING DEBT 404 (2005 ed.).
77. Convinced that preempting state restrictions on prepayment penalties was facilitating predatory lending and the bleeding of home equity, the Office of Thrift Supervision rescinded the prepayment rule, effective January 2003. See Alternative Mortgage Transaction Parity Act; Preemption, 67 Fed. Reg. 60,542 (Sept. 26, 2002) (codified at 12 C.F.R. pts. 560, 590, 591).
78. See Mansfield, supra note 61, at 473-511.
79. See ELIZABETH RENUART & KATHLEEN E. KEEST, THE COST OF CREDIT: REGULATION, PREEMPTION, AND INDUSTRY ABUSES § 3.9.4.1 (3d ed. 2005).
80. See Arthur E. Wilmarth, Jr., The OCC's Preemption Rules Exceed the Agency's Authority and Present a Serious Threat to the Dual Banking System, 23 ANN. REV. BANKING & FIN. L. 225, 235-37 (2004) (arguing that the OCC's 2004 preemption regulations governing national banks represent an attempt to achieve preemption parity with federal savings associations).
81. See, e.g., Letter from Carolyn J. Buck, Chief Counsel, OTS, Preemption of New Mexico Home Loan Protection Act (Sept. 2, 2003), available at http://www.ots.treas.gov/ docs/5/56306.pdf; Notice of OCC Preemption Determination and Order, 68 Fed. Reg. 46,264 (Aug. 5, 2003) (relating to the law of Georgia);
82. Letter from Carolyn J. Buck, Chief Counsel, OTS, Preemption of New Jersey Predatory Lending Act (July 22, 2003), available at http://www.ots. treas.gov/docs/5/56305.pdf;
83. Letter from Carolyn J. Buck, Chief Counsel, OTS, Preemption of New York Predatory Lending Law (Jan. 30, 2003), available at http:// www.ots.treas.gov/docs/5/56302.pdf;
84. Letter from Carolyn J. Buck, Chief Counsel, OTS, Preemption of Georgia Fair Lending Act (Jan. 21, 2003), available at http://www.ots.treas. gov/docs/5/56301.pdf.
85. See Tax Reform Act of 1986, 26 U.S.C. § 163(h) (2000).
86. See JOHN GIST, AARP, PUB. POLICY INST., A PROFILE OF OLDER TAXPAYERS 1 (2002) available at http://www.aarp.org/research/ economy/taxation/aresearch-import-342-DD76. html.
87. LOONIN & RAO, supra note 16, at 85-86.
88. Elizabeth Renuart, An Overview of the Predatory Lending Process, 15 HOUSING POL'Y DEBATE 467, 480 n.32 (2004).
89. For example, paying off a credit card bill of $5,000 at 18% APR over sixty months requires a monthly payment of about $125 because this high APR will generate $2,500 in interest. On the other hand, if one adds the $5,000 to a $100,000 mortgage loan for a total principal of $105,000 at a 7% APR for a term of thirty years, the $5,000 generates additional interest of $6,617 and raises the monthly payment on the credit card portion by about $30 to $155.
90. Kathleen C. Engel & Patricia A. McCoy, A Tale of Three Markets: The Law and Economics of Predatory Lending, 80 TEX. L. REV. 1255,1277-78 (2002).
91. A credit score is a number lenders use to help them decide how likely it is that a borrower will repay the loan in a timely way. See FAIR ISAAC CORP., UNDERSTANDING YOUR CREDIT SCORE 3 (2006), available at http://www.myfico.com7Offers/myFICO_ UYCS%20booklet.pdf. The Fair Isaac Corporation ("FICO") has developed the most widely used credit scoring system, which is based solely on information in consumer credit repons maintained by the credit reporting agencies. Id.
92. See U.S. DEP'T OF TREASURY AND U.S. DEP'T OF HOUS. AND URBAN DEV., JOINT REPORT ON RECOMMENDATIONS TO CURB PREDATORY MORTGAGE LENDING 33 (2000), available at http://www.huduser.org/publications/pdf/treasrpt.pdf [hereinafter HUD/TREASURY REPORT 2000].
93. Renuart, supra note 71, at 474.
94. See KENNETH TEMKIN ET AL., URBAN INST., SUBPRIME MARKETS, THE ROLE OF GSEs, AND RISK-BASED PRICING 4 (2002), available at http://huduser.org/Publications/pdf/ subprime.pdf.
95. "See, e.g., JIM CAMPEN, MAURICIO GASTON INST. FOR LATINO CMTY. DEV. AND PUB. POLICY, UNIV. OF MASS. AT BOSTON, BORROWING TROUBLE? V; SUBPRIME MORTGAGE LENDING IN GREATER BOSTON, 2000-2003, at 4 (2005), available at http://www.masscommunity andbanking.org/PDFs/BorrowingTrouble5.pdf (reporting that subprime home purchase loans accounted for 11.3% of the Boston area subprime loan market in 2003, up from 7.6% in 2002).
96. See, e.g., ERIC STEIN, COAL. FOR RESPONSIBLE LENDING, QUANTIFYING THE ECONOMIC COST OF PREDATORY LENDING: A REPORT FROM THE COALITION FOR RESPONSIBLE LENDING 8 (2001), available at http://www.responsiblelending. org/pdfs/Quant10-01.pdf (reporting that 80% of subprime loans contain prepayment penalties compared with only 2% of loans in the competitive prime market);
97. HUD/TREASURY REPORT 2000, supra note 75, at 93 (showing a 70% prepayment penalty rate for subprime loans and only a 2% penalty rate for prime loans).
98. See FREDDIE MAC, AUTOMATED UNDERWRITING REPORT Ch. 5 (1996), available at http://www.freddiemac.com/corpo rate/reports/moseley/chapS.htm;
99. Half of Subprime Loans Categorized as 'A' Quality, INSIDE B&C LENDING, June 10, 1996, at 7;
100. see also Edward Gramlich, Subprime Mortgage Lending, NAT'L MORTGAGE NEWS, May 31, 2004, at 4 ("[I]t is noteworthy that about half of subprime mortgage borrowers have FICO scores above [a] threshold [of 620], indicating that a good credit history alone does not guarantee prime status." (quoting Federal Reserve Board Governor Edward Gramlich)).
101. Kurt Eggert, Lashed to the Mast and Crying for Help: How Self-Limitation of Autonomy Can Protect Elders from Predatory Lending, 36 LOY. L.A. L. REV. 693, 699700 (2003) (citation omitted);
102. see also Engel & McCoy, supra note 73, at 1260 (describing predatory lending as "a catalogue of onerous lending practices... often targeted at vulnerable populations and resulting] in devastating personal losses").
103. See Patricia Sturdevant & William J. Brennan, Jr., A Catalogue of Predatory Mortgage Lending Practices, THE CONSUMER ADVOCATE (Nat'1 Ass'n of Consumer Advocacy, Wash., D.C.), Nov. 1999, at 4 (outlining such practices).
104. See id. Lenders and brokers sometimes even forge necessary signatures.
105. See id. In addition, the lure of first-time homeownership helps to fuel "property flipping," the purchase and quick resale of the property at inflated prices.
106. See Renuart, supra note 71, at 480-85.
107. See STEIN, supra note 79, at 2 (estimating that U.S. borrowers lose $9.1 billion annually as a result of predatory lending).
108. See Diana B. Henriques & Lowell Bergman, Mortgaged Lives: Profiting From Fine Print With Wall Street's Help, N.Y. TIMES, Mar. 15, 2000, at Al.
109. See Kurt Eggert, Held Up in Due Course: Predatory Lending, Securitization, and the Holder in Due Course Doctrine, 35 CREIGHTON L. REV. 503, 535-45 (2002) [hereinaf-ter Eggert, Predatory Lending].
110. See Kurt Eggert, Held Up in Due Course: Codification and the Victory of Form Over Intent in Negotiable Instrument Law, 35 CREIOHTON L. REV. 363, 375 (2002) [hereinafter Eggert, Codification] ("[T]he holder in due course doctrine provides that if one who holds an instrument that has been indorsed to him is not chargeable with knowledge of or participation in certain wrongful acts, then most of the defenses that the maker of the note had to the original beneficiary of the note cannot be used against the new holder").
111. Eggert, Predatory Lending, supra note 86, at 592-604 (chronicling the rise and demise of First Alliance's Mortgage and concluding that homeowners victimized by First Alliance predatory lending practices were unlikely to obtain redress because First Alliance had filed for bankruptcy in an effort to "stymie" litigation).
112. Not only does the holder in due course rule ordinarily eliminate liability for the loan holder, but the lenders or brokers may have no assets or may have disappeared.
113. F. PAUL BLAND, JR. ET AL., NAT'L CONSUMER LAW CTR., CONSUMER ARBITRATION AGREEMENTS: ENFORCEABILITY AND OTHER TOPICS §1.3.1 (2004 ed. & Supp. 2005).
114. See MORTGAGE BANKERS ASS'N OF AM., NATIONAL DELINQUENCY SURVEY, (19982004, 2006), available at http://www.mortgagebankers.org/ResearchandForecasts/ Productsand Surveys/NationalDelinquencySurvey.htm (reporting that the national subprime foreclosure rate (1) ranged from six to sixteen times higher than the prime foreclosure rate between 1998 and 2004 and (2) was 8.5 times higher than the prime foreclosure rate as of the second quarter of 2006). This Survey, available by subscription only, bases delinquency and foreclosure statistics on a sample of more than 41 million U.S. mortgage loans.
115. See id.
116. See DANIEL IMMERGLUCK & GEOFF SMITH, WOODSTOCK INST., RISKY BUSINESS: AN ECONOMETRIC ANALYSIS OF THE RELATIONSHIP BETWEEN SUBPRIME LENDING AND NEIGHBORHOOD FORECLOSURES, at i (2004), available at http://woodstockinst.org/document/ riskybusiness.pdf.
117. See STEVE TRIPOLI & ELIZABETH RENUART, NAT' L CONSUMER LAW CTR., DREAMS FORECLOSED: THE RAMPANT THEFT OF AMERICANS' HOMES THROUGH EQUITY- STRIPPING FORECLOSURE "RESCUE" SCAMS 8-9 (2005), available at http://www.nclc.org/news/ ForeclosureReportFinal .pdf.
118. Id.. at 8.
119. Id.
120. Id. at 8-9.
121. See supra note 31 and accompanying text.
122. See, e.g., Conseco Fin. Serv. Corp. v. N. Am. Mortgage Co., 381 F.3d 811, 814-15 (8th Cir. 2004) (describing how Conseco targets particular homeowners who might "benefit" from its debt consolidation loans);
123. see also Protecting Homeowners: Preventing Abusive Lending While Preserving Access to Credit: H. Hearing Before the Subcomm. on Financial Institutions and Consumer Credit and the Subcomm. on Housing and Community Opportunity of the Comm. on Financial Services, 108th Cong. 31-33 (2003) (statement of Thomas J. Miller, Att' y Gen. of Iowa) (stating that employees of lenders may be given quotas or incentives to bring in new customers for their employers).
124. See Equity Predators: Stripping, Flipping and Packing Their Way to Profits: Hearing Before the S. Spec. Comm. on Aging, 105th Cong. 31 (1998) (Statement of "Jim Dough," former employee of predatory lender) ("In fact, my perfect customer would be an uneducated widow who is on a fixed income, hopefully from her deceased husband's pension and Social Security, who has her house paid off, is living off of credit cards, but having a difficult time keeping up with her payments and who must make a car payment in addition to her credit card payments.").
125. Lenders typically will not provide such data to independent researchers, claiming it is proprietary. In limited circumstances, researchers can pay a high price to obtain data from one company, Loan Performance. For studies based on that data, see, for example, Quercia et al., Assessing the Impact of North Carolina's Predatory Lending Law, 15 HOUSING POL'Y DEBATE 573 (2004).
126. See 12 U.S.C. § 2803 (2000);
127. see also DEANNE LOONIN & CHI CHI WU, CREDIT DISCRIMINATION § 4.4.5 (4th ed. 2005 & Supp. 2006).
128. See 12 U.S.C. § 2803(b)(4) (2000).
129. See HUD/TREASURY REPORT 2000, supra note 75, at 36 (reporting that borrowers over the age of fifty-five make up 35% of subprime borrowers);
130. see also Howard Lax et al., Subprime Lending: An Investigation of Economic Efficiency, 15 HOUSING POL'Y DEBATE 533, 545, 564 (2004) (noting that borrowers sixty-five and older are five times more likely to obtain a subprime loan than are borrowers under age thirty-five);
131. CONSUMERS UNION S.W. REG'L OFFICE, ELDERLY IN THE SUBPRIME MARKET 3 (2002), available at http://www. consumersunion.org/pdf/elderly-sub.pdf (analyzing Texas refinance loans and finding that subprime penetration was greater in tracts with an older population).
132. KELLIE K. KIM-SUNG & SHARON HERMANSON, AARP PUB. POLICY INST., EXPERIENCES OF OLDER REFINANCE MORTGAGE LOAN BORROWERS: BROKER- AND LENDER-ORIGINATED LOANS 3 (2003), available at http://assets.aarp.org/rgcenter/post-import/dd83Joans. pdf (finding that 70% of borrowers with broker-originated loans relied heavily on their brokers to find the best mortgage, compared with just 52% of borrowers with lender-originated loans).
133. See id. at 3-4.
134. Lynn Drysdale & Kathleen E. Keest, The Two-Tiered Consumer Financial Services Marketplace: The Fringe Banking System and its Challenge to Current Thinking About the Socio-Economie Role of Usury Law in Today's Society, 51 S.C. L. REV. 589, 625-26 (2000).
135. See id. at 625-26, 639-44;
136. CTR. FOR RESPONSIBLE LENDING, OVERDRAFT LOANS TRAP BORROWERS IN DEBT: SMALL LOAN BUSINESS MODEL MUST BE RESPONSIBLE 1 (2004), available at http://www.responsiblelending.org/pdfs/ib018-Overdraft_Loans_Trap-0904.pdf.
137. See JEAN ANN FOX & ANNA PETRINI, CONSUMER FED'N OF AM., INTERNET PAYDAY LENDING: How HIGH- PRICED LENDERS USE THE INTERNET TO MIRE BORROWERS IN DEBT AND EVADE STATE CONSUMER PROTECTIONS 6 (2004), available at http://www.consumerfed. org/pdfs/ Internet_Payday .Lending 113004.pdf.
138. See JEAN ANN FOX, CONSUMER FED'N OF AM., UNSAFE AND UNSOUND: PAYDAY LENDERS HIDE BEHIND FDIC BANK CHARTERS TO PEDDLE USURY 2 (2004), available at http://www.consumerfed.org/pdfs/pdlrentabankreport.pdf.
139. See id. at 2-3.
140. See id. Lenders do not evaluate the consumer's ability to repay when extending this type of credit.
141. See id. at 3.
142. See, e.g., USFastCash.com, Need Cash?, https://usfastcash.com/? promo_id=28838& promo_sub_code=cash_overnight (last visited Nov. 19, 2006) (advertising "fast cash" of up to $500 with "no credit checks," "no paper hassles," and a response time of less than an hour for online applications).
143. KEITH ERNST ET AL., CTR. FOR RESPONSIBLE LENDING, QUANTIFYING THE ECONOMIC COST OF PREDATORY PAYDAY LENDING 2 (2003), available at http://www.responsible lending.org/pdfs/ CRLpaydaylendingstudyl21803.pdf (estimating that payday loans cost consumers approximately $3.4 billion annually).
144. See ELIZABETH RENUART & KATHLEEN E. KEEST, NAT'L CONSUMER LAW CTR., THE COST OF CREDIT: REGULATION, PREEMPTION, AND INDUSTRY ABUSES §7.5.5.5 (3d ed. 2005 & Supp. 2006).
145. See NAT'L CONSUMER LAW CTR. ET AL., COMMENTS ON THE FED. RESERVE BD.'S PROPOSED AMENDMENTS TO REGULATION DD AND PROPOSED OVERDRAFT PROTECTION GUIDANCE 2-3 (2004), available at http://www.nclc.org/action_agenda/bounce_loans/ content/BounceLoanCommentsS 6_04.pdf.
146. See id. at 4-5.
147. See NAT'L CONSUMER LAW CTR. ET AL., COMMENTS ON THE FEDERAL RESERVE BOARD'S PROPOSED REVISIONS TO OFFICIAL STAFF COMMENTARY TO REGULATION Z TRUTH IN LENDING REGARDING OPEN END CREDIT AND HOEPA TRIGGERS AND SOLICITATION FOR COMMENTS ON BOUNCE PROTECTION PRODUCTS §IV (2003), available at http://www.nclc. org/initiatives/test_and_comm/frb.shtml (documenting overdraft fees ranging from $25 to $35, regardless of the amount of the overdraft, and per day fees of between $2 and $5).
148. See WASH. DEP'T OF FIN. INST., OVERDRAFT PROTECTION PROGRAMS 4 (2003) (finding that about 25% of bounce borrowers are charged loan fees under these programs at least twice a month).
149. JACQUELINE DUBY ET AL., CTR. FOR RESPONSIBLE LENDING, HIGH COST & HIDDEN http://www.responsiblelending.or g/pdfs/ip009- High_Cost_Overdraft-0505.pdf.
150. See Miller v. Bank of Am. N.T. & S.A., No. CGC-99-301917, 2004 WL 3153009, at *1 (Cal. App. Dep't Super. Ct. Dec. 30, 2004).
151. See id. at *2.
152. See SHARON HERMANSON & GEORGE GABERLAVAGE, AARP, THE ALTERNATIVE FINANCIAL SERVICES INDUSTRY 6 (2001), available at http://www.aarp.org/research/creditdebt/credit/aresearch-import-198-IB51.html (expressing concern over the unfair practices in the payday loan market);
153. see also RACHELLE CUMMINS, AARP, PAYDAY LOANS IN SOUTH CAROLINA: WHAT CREDIT COUNSELORS SAY 2 (2005), available at http://assets.aarp. org/rgcenter/post-import/sc_credi t.pdf (finding that nine of thirteen credit counselors surveyed in South Carolina reported that up to 20% of their clients who had payday loans were over fifty, and that two counselors noted that up to 60% of their clients were in that category).
154. See ELIZABETH RENUART, AARP, PAYDAY LOANS: A MODEL STATE STATUTE 1124 (2000), available at http://assets.aarp.org/rgcenter/consume/d 16954_payday.pdf.
155. See supra Part II.C. 1.
156. 439 U.S. 299, 301 (1978) (allowing banks to charge out-of-state consumers the interest rate permitted in their home states).
157. See, e.g., Indep. Cmty. Bankers Ass'n of S.D., Inc. v. Bd. of Governors, Fed. Reserve Sys., 838 F.2d 969, 970 n.l (8th Cir. 1988) (recognizing that the bank-holding company's purchase of a South Dakota bank was motivated by the desire to move its credit card operations to South Dakota in order to take advantage of an unregulated usury environment when conducting its interstate business);
158. Richard Eckman, The Delaware Consumer Credit Bank Act and Exporting Interest Under §521 of the Depository Institutions Deregulation and Monetary Control Act of 1980, in 39 BUS. LAW. 1251, 1264 (Alan S. Kaplinsky ed., 1984).
159. South Dakota's tax revenue from banks increased from $3.2 million in 1980 to almost $27.2 million in 1987; comparable revenue for Delaware during the same period rose from $2.4 million to almost $40 million. Small Us Usurious, ECONOMIST, July 2, 1988, at 26.
160. See DIANE ELLIS, FDIC, BANK TRENDS: THE EFFECT OF CONSUMER INTEREST RATE DEREGULATION ON CREDIT CARD VOLUMES, CHARGE-OFFS, AND THE PERSONAL BANKRUPTCY RATE 6 (1998), available at http://www.fdic.gov/bank/analytical/bank/bt_9805.pdf.
161. See Smiley v. Citibank (S.D.), N.A., 517 U.S. 735, 744-45 (1996).
162. 61 Fed. Reg. 4869 (1996) (codified at 12 C.F.R. §7.4001(a) (2006)).
163. See Smiley, 517 U.S. at 744-5.
164. See Cardweb.com, Tardy Pain, http://www.cardweb.com/cardtrak/news/ 2006/january/ 17a.html (last visited Nov. 19, 2006) (reporting that the average late payment fee soared from just under $14 in 1995 to over $34 in 2006);
165. Cardweb.com, Overlimit Fees, http://www. cardweb.com/cardtrak/news/2004/ march/19a.html (last visited Nov. 19, 2006) (reporting that average over-limit fees jumped from about $13 in 1995 to over $30 in 2004);
166. Cardweb.com, Fee Party, http://www.cardweb.com/cardtrak/news/2005/ january/13a.html (last visited Nov. 19, 2006) (reporting that penalty fee revenue has increased dramatically, reaching $14.8 billion in 2004 and
167. See Ana M. Aizcorbe et al., Recent Changes in U.S. Family Finances: Evidence from the 1998 and 2001 Survey of Consumer Finances, 89 FED. RES. BULL. 1, 25 (2003).
168. See U.S. CENSUS BUREAU, STATISTICAL ABSTRACT OF THE UNITED STATES: BANKING NO. 1190: CREDIT CARDS-HOLDERS, NUMBER, SPENDING, AND DEBT, 2000 AND 2002, AND PROJECTIONS, 2005 (2005), available at http://www.census.gov/prod/2004pubs/03statab/ banking.pdf.
169. See U.S. DEP'T OF COMMERCE, CURRENT POPULATION REPORTS: PROJECTIONS OF THE NUMBER OF HOUSEHOLDS AND FAMILIES IN THE UNITED STATES: 1995 TO 2010, at 9 (2003), available at http://w ww.census.gov/prod/l/pop/p25-l 129.pdf (projecting the number of U.S. households to be 108.8 million by 2005).
170. TAMARA DRAUT & JAVIER SILVA, DEMOS: A NETWORK FOR IDEAS AND ACTION, BORROWING TO MAKE ENDS MEET: THE GROWTH OF CREDIT CARD DEBT IN THE '90s, at 9 (2003), available at http://www.demos.org/pubs/borrowing_to_. make_ends_meet.pdf.
171. See supra notes 11-12 and accompanying text. McGhee and Draut also reported that the average credit card-indebted family in the fifty-five-to-sixty-four-year-old age group spends 31% of its income on debt payments, 10% more than the same group spent a decade ago.
172. MCGHEE & DRAUT, supra note 10, at 1;
173. see also, e.g., Patrick McGeehan, Soaring Interest Compounds Credit Card Woes for Millions, N.Y. TIMES, Nov. 21, 2004, at A1.A36.
174. See FED. TRADE COMM'N, FRAUD AND IDENTITY THEFT COMPLAINTS RECEIVED BY THE FEDERAL TRADE COMMISSION FROM CONSUMERS AGE 50 AND OVER 4 (2006), available at http://aging.senate.gov/public/JUes/ftc.pdf (reporting common fraud complaints among consumers over the age of fifty regarding foreign money offers; prizes, sweepstakes, and lotteries; Internet auctions, Internet services, and computer complaints; shop-at-home and catalogue sales; and telemarketing).
175. See id.
176. See Trent M. Murch, Revamping the Phantom Protections for the Vulnerable Elderly; Section 3Al.l(b), New Hope for Old Victims, 6 ELDER L,J. 49, 54-55 (1998). For more information about elder fraud victims, see Press Release, Fed. Trade Comm'n, FTC Testimony: Identifying and Fighting Consumer Fraud Against Older Americans (July 27, 2005), available at http://www.ftc.gov/opa/2005/seniortest.htm.
177. See Nat'1 Ctr. on Elder Abuse, Clearinghouse on Abuse and Neglect of the Elderly: Annotated Bibliography: Financial Abuse, Undue Influence, Scams, Frauds and Protection of Assets 1 (2003), available at http://www.elderabusecenter.org/default.cfm?p=cane_ finabuse.cfm ("Older individuals may be more susceptible to financial exploitation and fraud simply because many have assets in the forms of savings, stocks, insurance policies, and property. Seniors with dementia or mental health concerns may be particularly vulnerable to financial abuse by friends and family members or court appointed guardians who exert undue influence. They may also be targeted for identity theft or become victimized by predatory lending practices.").
178. Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Pub L. No. 109-8, 119 Stat, 23 (2005) (codified at 11 U.S.C. §101(2000)).
179. See generally JOHN RAO, NAT'L CONSUMER LAW CTR., WHAT'S WRONG WITH S. 256, LET US COUNT THE WAYS (2005), available at http://www.nclc.org/action_agenda/ bankruptcy/content/KeyProblemswithS256.pdf;
180. HENRY J. SOMMER & JOHN RAO, CONSUMER BANKRUPTCY LAW AND PRACTICE: SPECIAL GUIDE TO THE 2005 ACT (2005).
181. See Ronald J. Mann, Bankruptcy Reform and the "Sweat Box" of Credit Card Debt, U. ILL. L. REV. (forthcoming 2007) (manuscript at 101-02) available at http.V/www.utexas. edu/law/faculty/rmann/info/Data/IllinoisPaper2.pdf.
182. Id. at 124.
183. See 42 U.S.C. §407 (2000) (Social Security);
184. U.S.C.A. §5301 (2000 & Supp. 2006) (Veterans Assistance);
185. see generally DEANNE LOONIN, N AT'L CONSUMER LAW CTR., SOCIAL INSECURITY: UNDERSTANDING FEDERAL BENEFITS OFFSETS (2003) (providing information about consumer protections from benefit offsets).
186. See, e.g., Huggins v. Pataki, No. 01 CV 3016(JG), 2002 WL 1732804, at *4 (E.D.N.Y. July 11, 2002) (holding that the possibility that a customer might experience a temporary loss of access to Social Security benefits did not constitute a violation of the anti-garnishment provision of Social Security Act).
187. But see Mayers v. N.Y. Cmty. Bancorp Inc., No. CV-03-5837, 2005 WL 2105810, at *8-9 (E.D.N.Y. Aug. 31, 2005) (allowing plaintiffs to proceed on their claim that state bank account garnishment procedures deny debtors procedural due process by permitting accounts containing only exempt electronically deposited Social Security funds to be frozen).
188. See, e.g., Wash. State Dep't of Soc. & Health Servs. v. Guardianship Estate of Keffeler, 537 U.S. 371, 382, 386-87 (2003) (allowing the state, acting as a representative payee, to use a portion of foster children's Social Security payments as reimbursement for expenditures incurred in administering the program on the foster children's behalf).
189. In this context, "setoff ' refers to a bank's practice of collecting fees or other money owed to it from funds in a different account. See Nolo.com, Glossary-Setoff, http://www.nolo. com/deflnition.cfm/Term/BA35C43E- E381-47DF-8425864A70A45C02/alpha/S/.
190. See, e.g., Lopez v. Wash. Mut. Bank, F.A., 302 F.3d 900 (9th Cir. 2002), amended by 311 F.3d 928 (9th Cir. 2002);
191. Frazier v. Marine Midland Bank, 702 F. Supp. 1000 (W.D.N.Y. 1988). However, the majority rule is that otherwise exempt income is exempt from setoff as well as from private creditor seizure.
192. See, e.g., Marengo v. First Mass. Bank, N.A., 152 F. Supp. 2d 92, 94-95 (D. Mass. 2001) (holding that a banker's setoff is an "other legal process" within the meaning of the anti-alienation provisions of Social Security and Supplemental Security Income law and thus exempt from setoff).
193. Setoff without prior notice has survived constitutional challenges because there is no "state action." See MARK BUDNITZ & MARGOT SAUNDERS, CONSUMER BANKING AND PAYMENTS LAW §4.3.5 (3rd ed. 2005 & Supp. 2006).
194. 31 U.S.C. §§ 3701-3720(E) (2000 & Supp. 2006).
195. See id. § 3716(c)(3)(A)(ii).
196. See ROBERT J. HOBBS, FAIR DEBT COLLECTION § 12.5.2 (5th ed. 2004 & Supp. 2006).
197. See id. at app. F (providing a summary of state homestead exemptions and revealing that the only states not to provide for any such exemptions are Delaware, Maryland, New Jersey, and Pennsylvania).
198. In introducing legislation to set a uniform federal floor for homestead exemptions of $75,000 for bankruptcy debtors over the age of sixty-two, Senator Russ Feingold (D-Wis.) noted that the homestead exemption in too many cases is "woefully inadequate." 151 CONG. REC. S1820-03, S1829 (daily ed. Mar. 1, 2005) (statement of Sen. Feingold).
199. See HOBBS, supra note 153, at app. F.
200. See NAT'L CONSUMER LAW CTR., THE LIFE AND DEBT CYCLE PART TWO: FINDING HELP FOR OLDER CONSUMERS WITH CREDIT CARD DEBT 4-6 (2006), available at http://www.nclc.org/news/content/rising_debt_part2.pdf. These traditional providers tend to refer consumers to credit counseling agencies. See id. at 8.
201. See id. at 12-13 (citing a study of counseling agencies finding that 20% of their clients were elders and that this percentage was higher than in previous years). In contrast, elders represent about 16% of the general population. See U.S. CENSUS BUREAU, TABLE DP-1: PROFILE OF GENERAL DEMOGRAPHIC CHARACTERISTICS FOR THE UNITED STATES: 2000, available at http://www.census.gov/ipc/www/usinterimproj/natproJtab02b.pdf.
202. See News Release, Internal Revenue Serv., IRS Takes New Steps on Credit Counseling Groups Following Widespread Abuse (May 15, 2006), available at http://www.irs.gov/newsroom/article/0,id=156996.00.html (announcing that the IRS had been auditing sixty-three credit counseling agencies over the past two years, in most cases leading to revocations, proposed revocation or other termination of tax-exempt status).
203. See Memorandum on Credit Counseling Organizations from David L. Marshall, Chief Counsel of the Internal Revenue Serv., to Elizabeth S. Henn 3 (May 9, 2006), available at http://www.irs.gov/pub/irs-wd/0620001.pdf.
204. See NAT'L CONSUMER LAW CTR. & CONSUMER FED'N OF AM., CREDIT COUNSELING IN CRISIS: THE IMPACT ON CONSUMERS OF FUNDING CUTS, HIGHER FEES AND AGGRESSIVE NEW MARKET ENTRANTS 1 (2003), available at http://www.consumerfed.org/pdfs/ credit_counseling_report.pdf.
205. See id. at 23.
206. See id. at 20.
207. See id. at 1.
208. See NAT'L CONSUMER LAW CTR., supra note 157, at 14-15 (describing results of an agency survey demonstrating the lack of a comprehensive approach to elder-focused counseling among most agencies).
209. See generally U.S. Dep't of Housing and Urban Dev., Find a HUD Approved Housing Counseling Agency, http://www.hud.gov/offices/hsg/sfn/hcc/ hccprof14.cfm (last visited Nov. 19, 2006) (identifying and describing sponsored agencies that provide free services to homeowners and prospective homeowners); see also Steven P. Homburg, Strengthening the Case for Homeownership Counseling: Moving Beyond "A Little Bit of Knowledge" 5 (Joint Ctr. For Hous. Studies, Harvard Univ., Working Paper No. W04-12, 2004), available at http://www.jchs.harvard.edu/publications/homeownership/w04- 12.pdf (recognizing that Congress has appopriated $40 million for these services).
210. See generally NEAL SHOVER & GLENN S. COFFEY, THE ORIGINS, PURSUITS AND CAREERS OF TELEMARKETING PREDATORS (2002), available at http://www.ncjrs.gov/pdffiles1/nij/grants/197061.pdf (reviewing the ongoing problem of telemarketing fraud and discussing how companies often evade enforcement).
211. See Eggert, supra note 81, at 718-19 (citing Richard A. Kalish, The New Ageism and the Failure Models: A Polemic, 19 GERONTOLOGIST 398, 398 (1979); Robert H. Binstock, The Aged as Scapegoat, 23 GERONTOLOGIST 136, 136 (1983)).
212. See Kathleen C. Engel & Patricia A. McCoy, Predatory Lending: What Does Wall Street Have to Do with It?, 15 HOUSING POL'Y DEBATE 715, 728-40 (2004) (explaining that the economic risk to the lending industry associated with loans made to riskier borrowers is managed so that investors in securities backed by predatory mortgage loans have little or no incentive to police the behavior of the original lenders).
213. Dan Immergluck & Geoff Smith, The External Costs of Foreclosure: The Impact of Single-Family Mortgage Foreclosures on Property Values, 17 HOUSING POL'Y DEBATE 57, 58 (2006) (noting the hardship experienced by a consumer who loses her home and reporting that the estimated 3,750 foreclosures in Chicago in 1997 and 1998 lowered the value of nearby homes by an average of $159,000); see also Kathleen C. Engel, Do Cities Have Standing? Redressing the Externalities of Predatory Lending, 38 CONN. L. REV. 355, 356-60 (2006) (discussing the costs of predatory lending and foreclosures to neighborhoods and municipalities).
214. See, e.g., Truth in Lending Act of 1968, Pub. L. No. 90-321, tit. I, 82 Stat. 146 (1968) (codified at 15 U.S.C. §§ 1601-66j) (primarily a disclosure law). The need to keep the playing field fair and competitive for responsible lenders was one of the principal reasons for passing the Truth in Lending Act. See H.R. REP. NO. 90-1040, pt. 3, at 9 (1967), as reprinted in 1968 U.S.C.C.A.N. 1962, 1965 (quoting President Lyndon Johnson's statement that the Truth in Lending Act was "urgently needed to . . . [pjrotect legitimate lenders against competitors who misrepresent credit costs").
215. See, e.g., Problems in Community Development Banking, Mortgage Lending Discrimination, Reverse Redlining, and Home Equity Lending: Hearings Before the S. Comm. on Banking, Housing, and Urban Affairs, 103d Cong. (Feb. 3, 17, 24, 1993); Home Ownership and Equity Protection Act: Hearing on S. 924 Before the S. Banking Comm., 103d Cong. (May 19, 1993).
216. Home Ownership and Equity Protection Act of 1994, Pub. L. No. 103-325, 108 Stat. 2190 (1994) (codified at 15 U.S.C. §§ 1602(aa), 1639)).
217. HOEPA has succeeded in reducing the costs of mortgage loans because lenders are making fewer and fewer high-cost loans that trigger coverage. See NAT'L CONSUMER LAW CTR., COMMENTS TO THE FEDERAL RESERVE BOARD ON THE HOME EQUITY LENDING MARKET 32 (2006), available at http://www.nclc.org/action_agenda/predatory_mortgage/ content/HOEPACommentsAug06.pdf. However, destructive lending practices and their consequences, as evidenced by high foreclosure rates, continue nonetheless. See id. at 18, 33 (discussing the weaknesses of HOEPA and offering suggestions for improvement).
218. Lenders should tailor the loans to the needs of their particular consumers; for example, if a consumer needs a personal loan, the lender should not suggest a refinancing of a first mortgage loan.
219. This duty should extend to lenders, brokers, appraisers, servicers, debt collectors, assignees, debt buyers, and their agents and employees.
220. Age is already recognized as a protected category by the Equal Credit Opportunity Act. See 15 U.S.C. § 1691 (2000). We think it appropriate to add age to the list of protected categories under the Fair Housing Act of 1968. See 42 U.S.C. § 3605 (2000).
221. See infra Part III.B.
222. Examples of effective regulation of credit card lending include: (1) capping all periodic interest rates (for example, at prime plus 10%); (2) capping all other charges at an amount the card issuers can show is reasonably related to their out-of-pocket costs; (3) prohibiting lenders from unilaterally changing terms; (4) outlawing penalties for any behavior not directly linked to the specific card account at issue; (5) requiring careful underwriting for the maximum credit permitted under the plan in relation to the total maximum credit permitted under all open credit card accounts plus other consumer debt; and (6) promoting debit card use by leveling the playing field between credit and debit cards. The latter requires that banks be prohibited from allowing overdrafts with ATM or debit cards, that debit card users be granted the same protections against unauthorized use and erroneous charges as credit card borrowers, and that bank fees for debit card use be limited using the same standards as those suggested for credit cards.
223. Examples of effective regulation of mortgage lending include: (1) strictly limiting (ideally to zero) all points and fees that can be financed by lenders: (2) eliminating the incentives to increase loan prices by prohibiting indirect broker fees when the borrower also pays fees directly; (3) restricting prepayment penalties; (4) adding a comprehensive right to cure defaults to avoid foreclosures; (5) requiring that alternatives to default ("work-out options") be evaluated before a foreclosure can be initiated; and (6) creating a home loan preservation fund to help homeowners save their homes when in default.
224. Examples of effective regulation of small sum lending include: (1) prohibiting taking a check or using an agreement to debit a bank account in connection with the making of a loan and (2) requiring installment loans if the annual percentage rate exceeds 36% on loans under $25,000.
225. See Comments of the Fed. Reserve Bd., 65 Fed. Reg. 81438, 81441 (Dec. 26, 2000) (codified at 12 C.F.R. pt. 226) ("A borrower does not benefit from . . . expanded access to credit if the credit is offered on unfair terms or involves predatory practices.").
226. See, e.g., Fair Debt Collection Practices Act, 15 U.S.C. § 1692 (2000).
227. See generally HOBBS, supra note 153.
228. See JONATHAN SHELDON ET AL., NAT'L CONSUMER LAW CTR., UNFAIR AND DECEPTIVE ACTS AND PRACTICES § 10.7.3.7 (6th ed. 2004 & Supp. 2005).
229. See generally Nat'l Consumer Law Ctr., Consumer and Media Alert: The Small Print That's Devastating Major Consumer Rights (July 28, 2003), http://www.nclc.org/action_agenda/model/arbitration.shtml.
230. See 15 U.S.C. § 45(a) (2000). The FTC Act does not explicitly provide for private remedies. See 15 U.S.C. §§ 41-51. Private litigants have attempted to bring individual enforcement actions, but judicial precedent, with only a few exceptions, indicates that there is no private right of action under the FTC Act. See SHELDON ET AL., supra note 185, at § 9.1.
231. See generally SHELDON ET AL., supra note 185.
232. 16 C.F.R. § 433.2 (2006).
233. See id.
234. See SHELDON ET AL., supra note 185 (describing the current state laws providing for enhanced remedies for the elderly and the disabled).
235. For example, in a legal needs survey of seniors in Utah, 58% of seniors indicated that they had legal difficulties with telemarketers, and 25% had difficulties with salespersons. See JILENNE GUNTHER & ALAN ORMSBY, PLANNING FOR THE LEGAL NEEDS OF UTAH'S SENIORS: FINAL REPORT 31 (2004), available at http://www.tcsg.org/ finalreport1018_04.pdf. Overall, when asked to name the top three legal issue areas of concern, 25% listed consumer problems. See id.
236. A key restriction affecting consumer cases is the restriction barring lawyers in these programs from claiming attorneys' fees awards. See Omnibus Consolidated Rescissions and Appropriations Act of 1996, Pub. L. No. 104-134, § 504(a)(13), 110 Stat. 1321, 50 (1996).
237. See Press Release, Admin. on Aging, $1.4 Million in Grants to Enhance Access to Senior Legal Services (Oct. 10, 2005), available at http://www.aoa.gov/press/pr/2005/05_oct/10_13_05a.asp.
238. For a discussion of the limits of hotline programs, see Robert Echols & Julia Gordon, Recommendations and Thoughts from the Managers of the Hotline Outcomes Assessment Study Project, MGMT. INFO. EXCHANGE J. 9 (2003), available at http://www.clasp.org/ publications/hotline_mie.pdf
239. See SHELDON ET AL., supra note 185, at § 5.1.2.3 (listing state debt management laws).
240. See generally David Lander & Deanne Loonin, Restoring "Nonprofitness" and "Quality" to the Credit Counseling Industry, 4 NORTON BANKR. L. ADVISER 1 (2005).
241. See 11 U.S.C. § 521(b) (2000) (providing that the debtor must file a certificate from an approved credit counseling agency confirming that the debtor received the briefing required by § 109(h) of the Bankruptcy Code and, if a debt repayment plan was developed through the counseling, a copy of that plan).
242. See Susan Block-Lieb, Mandatory Protections as Veiled Punishments, 69 BROOK. L. REV. 425, 447 (2004).
243. See SHELDON ET AL., supra note 185, at §5.1.2.3.
244. See Karen Gross, Financial Literacy Education: Panacea, Palliative, or Something Worse?, 24 ST. LOUIS U. PUB. L. REV. 307, 308 (2005).
245. Old Scams-New Victims: Breaking the Cycle of Victimization Elderly Victimization, Hearing Before the S. Spec. Comm. On Aging, 109th Cong. 54-55 (July 27, 2005) (statement of Dr. Denise C. Park, a cognitive neurologist at the University of Illinois at Urbana-Champaign and Director of the Royball Center for Healthy Minds).
246. See generally AARP, REVERSE MORTGAGES, available at http://www.aarp.org/money/revmort (offering information for consumers and advocates on reverse mortgages).
247. See, e.g., VICTORIA WONG & NORMA PAZ GARCIA, CONSUMERS UNION OF U.S., INC., THERE'S NO PLACE LIKE HOME: THE IMPLICATIONS OF REVERSE MORTGAGES ON SENIORS IN CALIFORNIA 1 (1999), available at http://www.consumersunion.org/pdf/reverse.pdf.
248. See AARP, HOME MADE MONEY: A CONSUMER'S GUIDE TO REVERSE MORTGAGES 11 (2006), available at http://assets.aarp.org/www.aarp.org_/articles/ revmort/homeMadeMoney.pdf.
249. 24 C.F.R. § 206.41 (2006). For more information about the reverse mortgage counseling program, see Letter from John C. Weicher, Assistant Sec'y for Hous., U.S. Dep't of Hous. & Urban Dev., to all approved mortgagees (June 23, 2004), available at http://www.hudclips.org/sub_nonhud/html/ shortcut.htm (follow "2004" hyperlink under the "Letters" and "Mortgagee" headings, then click on number 25) (specifying HUD policies regarding counseling).
250. Eggert, supra note 81, at 696.
251. See id.
252. See Jonathan Fisher et al., The Retirement Consumption Conundrum: Evidence from a Consumption Survey 2-3, 8 (Ctr. for Ret. Research, Boston Coll., Working Paper No. 2005-14, 2005), available at http://www.bc.edu/centers/crr/papers/WP_2005-14.pdf (implying that there are problems with the Consumer Expenditure Survey's definition of retirement age).
253. For a list of Woodstock publications on these topics, see Woodstock Institute, http://www.woodstockinst.org/publications (last visited Nov. 19, 2006).
254. See supra note 100 and accompanying text.
255. 12 U.S.C. §§ 2801-10 (2000); see supra note 101 and accompanying text.
256. See MCGHEE & DRAUT, supra note 11.
257. See, e.g., WOODSTOCK INST., SOCIAL AND ECONOMIC INDICATORS 2 (2005), available at http://www.woodstockinst.org/publications/task.doc_download/gid,517.
258. See id. at 1.
259. For example, there has been a steady decrease over time in the percentage of eligible households receiving assistance through the Low-Income Home Energy Assistance Program ("LIHEAP"). CHARLES HARAK & OLIVIA BAE WEIN, ACCESS TO UTILITY SERVICE §7.1.6 (3d ed. 2004 & Supp. 2006).
260. See 31 U.S.C. § 3716 (2000 & Supp. 2006). There are many other ways, including tax offsets and administrative wage garnishment, for the government to collect debts. Even if the Act is not repealed, at a minimum, the $750 exemption amount should be indexed to changes in the cost of living and the rate of inflation.
261. See supra notes 153-156 and accompanying text (discussing homestead exemptions).
262. See supra note 155.
263. See supra note 10 and accompanying text.
264. See VISA U.S.A., INC., CREDIT COUNSELING DEBT MANAGEMENT PLAN ANALYSIS 29 (1999) (on file with author).
265. Id. at 21.
266. See 11 U.S.C. § 502(k) (2000).
267. See id.
268. NAT'L FOUND. FOR CREDIT COUNSELING, CONSUMER COUNSELING AND EDUCATION UNDER BAPCPA: THE BANKRUPTCY ABUSE PREVENTION AND CONSUMER PROTECTION ACT OF 2005: YEAR ONE REPORT 8 (2006), available at http://www.nfcc.org/ NFCC_Year_One_Bankruptcy_Report2.pdf.
269. See Consumer Fed. of Am. & Nat'l Consumer Law Ctr., Comments to Executive Office of the U.S. Trustee on Pre-Filing Counseling Provisions 3-4 (August 31, 2005), available at http://www.consumerlaw.org/initiatives/ credit_counseling/content/CommentsAUG31.pdf (recommending requirements that creditors accept reasonable offers and that agencies offering DMPs provide for repayment of at least 60% of the principal).
270. "Re-aging" is a way of starting over again with a delinquent credit card account. Creditors make a delinquent account current and stop charging late fees. In some cases, the creditor also waives previously owed fees.