American Dream Faces Setbacks in Peoria

There’s a scandal brewing in Peoria and it doesn’t smell like potpourri.

Allegedly, low-income first-time homebuyers got hooked up with predatory lenders who charged them balloon payments, high interest rates and refinance penalties. Having received government assistance for some time, there were rules in place barring making these loans to these individuals. Now they can’t make payments.

It seems the poor people attended a home-owning class sponsored by the Peoria Housing Authority. The instruction then turned into a pitch session for the predatory loans.

A PHA employee who complained about the practice was fired.

The Peoria Pundit has been following the story, with growing indignation.

The Peoria Journal Star too tracked the tale, less stridently, but with these quotes:

    “These types of loans should not have been part of the program,” PHA attorney Brian Mooty said at a board meeting on Monday.

    PHA Executive Director Roger John blamed the situation on a previous employee… who left the agency… “It didn’t come to light until after she left,” John said. “Hindsight is 20-20.”

Ho hum, a 58-year old housekeeper who took one of the loans, “will pay $97,494 in interest on the $53,500 loan and won’t be building equity in the home until making five years of payments.” Whoopsydaisy.

(Thanks to Andy!)

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  1. The Unicorn says:

    It’s actually the Peoria *Journal*-Star.

    (I know because my parents used to work there as reporters.)

  2. This is only the beginning. Low interest rates which drove monthly mortgage payments below rental rates prompted a lot of competition in the mortgage market. It used to be that job + down payment = car…but now it’s becoming job + interest only loan = house.

    In fact, I wouldn’t be surprised to find that a great portion of the people “suckered” into mortgages that would default on them in 2-3 years knew it going in. Afterall, if a mortgage is cheaper than rent, why not buy a brand new house to live in until you can’t pay for it anymore? Then just move back into an apartment and all the suckers like you and me get to pay for it in higher future interest rates.

  3. mrscolex says:

    God fucking damnit. Seriously I want to know who the shits are who let this thing go through? Everytime I start to get a sort of diary of anne frank “There aren’t any bad people” in the world sort of optimism somebody does something like this.

    Somebody out there is aware of the fact that these loans are hurting people, and somebody out there is sleeping every night knowing that they’re doing it. Who are these people and can they be held accountable?