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Home >> Lending
Unscrupulous Banker Causes Huge Problems
A trusted local banker had a friend sign a balloon note for a car when she thought she was signing a regular term note. Now she has been asked to pay a ridiculously high payment or take out a second mortgage on her house. The banker has been asked to resign or be terminated. Right now we know of three people to whom this has happened. What can she do? She is upside down $16,500. Do we have any recourse?
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 For a consumer loan, your friend should have also been given a Truth in Lending disclosure that clearly specified the payment schedule. This would have been something like "36 payments of $500 beginning November 13, 2007 and one final payment of $16,500." If the loan was for more than $25,000 and wasn't secured by real estate, this disclosure wouldn't have been required, but is still often made. If your friend borrowed $30,000, as an example, and was scheduled to pay 35 payments of $500 and they thought this would retire the debt, the math just doesn't bear this out. Only $18,000 would be repaid, not to mention there is no interest included.
This is the reason people need to read contracts before they sign them. Was the contract misleading? Was the banker acting illegally? Those are questions for the lawyers and a court, but one fact stands out. Your friend entered into an agreement, not with the banker, but with the bank. If the bank is asking the banker to leave because of this, they are all but admitting fault. Have your friend ask the bank to renew and extend the loan with an affordable payment. In the long run, he/she will be paying a realistic loan amount just as had a longer contract been entered into in the first place. If the car isn't sufficient collateral any longer, your friend needs to impress on the bank that this is partially due to the original terms, and is not his/her fault. As a show of good faith, an additional cash payment may be offered to bring the loan amount down.
Published on BankingQuestions.com 11/14/08
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