The Columbia Journalism Review recently ran an article in which it questioned the media’s used of the word subprime in replace of predatory lending.
The article “How Subprime killed Predatory” by Elinore Longobardi, is available to subscribers of the Columbia University Graduate School of Journalism. The school is known for its number of Pulitzer Prizes and is one of the top ranking journalism schools in the country.
The article points out that the media professionals all over the country are using the term subprime as the word relating to the mortgage crisis. The media organizations have not been clear on exactly what the definition of predatory lending truly is. The definition itself is clear. Predatory Lending is lending that is predatory. One knowing sought out an individual or group of individuals to take advantage of that individuals or group of individuals’ status.
Longobardi in the article notes a 2000 report by the former Senator Phil Gramm who was the head of the housing and urban affairs committee at the time. The report stated how it was difficult to comprehend how Congress can put together proposals to fight against predatory lending when we have no obvious understanding of what predatory lending truly is. It stated that due to the lack of a definition, we may lose sight of the target and it the wrong target entirely.
The fact is that news organizations and their editors felt comfortable with the mortgage industries term subprime because it didn’t conjure up thoughts of moral judgments’ according to Lorgobardi. The media choose to use subprime over seventy five thousand times in the year 2007 and only used the word predatory one thousand times according to Factiva search.
The word subprime implies that somehow the borrower was less than perfect in regard to handling the transactions and that the lender who sold the predatory loans to individuals and targeted individual groups where somehow not to blame.
Longobardi writes that “This crisis without a name was always going to be difficult to cover. When the business press lost track of the plight of borrowers, it lost track of reality.”
Setting the record straight; subprime in the mortgage industry refers to loans that have a higher risk in regard to an individual’s credit, income and assets when underwriting the loan. The loans themselves were designed for individuals with credit scores less than 620 and higher debt to income scenarios. Predatory lending means you sought out individuals or groups of individuals and sold a product to those individuals who did not understand, who could not have understood and could not afford the product being sold yet it was sold to them anyway. In addition, individuals that could have been placed in products that were superior to the product they were sold were not based on their race.
All companies and individuals have a moral responsibility to first do no harm. Mortgage Lenders seem to have forgotten about this ethically responsibility and have created an economic nightmare.
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