Financial Fracking in the Land of the Fee, 1980–2008

Abstract

In 1986, Tito Manor went shopping for a car. At the lot, the car salesman informed Manor that he would need someone to cosign, which his aunt, Gloria Young, ultimately agreed to do. The car salesman, who passed the completed loan application on to Fidelity Consumer Discount Company, notified both Manor and his aunt that the loan had been approved. Then, the salesman instructed them to come to the dealership and bring the aunt’s house deed, just as verification that she was indeed a homeowner. However, the dealer never informed Young that the house was being used as security for her nephew’s car loan. The lender, Fidelity, took a first mortgage on Young’s home at an interest rate of 36 percent—far in excess of the Pennsylvania state usury cap of 24 percent. Unable to keep up with the principal and interest on the car note after several months, Tito suggested that he return the car to Fidelity, to which the lender responded, according to uncontradicted deposition testimony: “We don’t want the car. We want your aunt’s house” (Mansfield 2000, 512–17). The steep loan terms made seizing the home not simply more likely, but also a more profitable alternative than seeing the loan terms satisfied. These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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