If you think banks, auto finance and mortgage companies are usurious, try borrowing on the street in Machester, England. John Kiely, a 36 year-old loan shark, charged some of his "clients" rates as high as 2,437 percent. Kiely was sentenced in Manchester Crown Court yesterday for a range of offences.
Doubtless the people who borrowed from "Johnny Boy" Kiely might have shied away from asking for a refinancing. The "ruthless individual" relied on a network of enforcers to collect from his creditors, one of whom told the court a concrete block was thrown at her window just hours after one of the fine gentlemen called.
A story in the Independent says Kiely isn't the only loan shark working in Manchester, and business for these truly predatory lenders is likely to boom as the UK economy deteriorates. As one of Kiely's victims put it,
I have heard of other loan sharks operating in Manchester and I'm sure that many people will be forced to use them, especially in the credit crunch. There are more people like Kiely out there. People need to be aware. You will never get to the end of the last payment. It just goes on and on and on.
That last part might sound familiar to the large and growing number of Americans who are trying to refinance now. A Bloomberg report yesterday noted the number of U.S. mortgage borrowers owing more than their properties are worth may rise to 48 percent, or 25 million homes, as prices drop through the first quarter of 2011.
That puts the Obama loan modification plan front and center of the battle to revive the housing market, and maybe even the economy. You may recall a news story at the end of last month that the administration secured a "verbal agreement" from 25 lenders to improve their efforts to assist borrowers in danger of foreclosure.
But the Obama plan isn't working as hoped. Not least because it's not always in the lenders interest to modify a loan. Mortgage lenders (or servicers, at least) are often slow-tracking modifications and complaining that they risk being sued if they do tweak a loan's terms. That's what Barbara Harris and her husband discovered when they tried to get their mortgage adjusted. Karen Weise tells their story on Marketplace tonight.