Tyler Cowen is the NY Times columnist you should be reading. Check out this amazing piece, especially this section on "predatory borrowing":
There has been plenty of talk about “predatory lending,” but “predatory borrowing” may have been the bigger problem. As much as 70 percent of recent early payment defaults had fraudulent misrepresentations on their original loan applications, according to one recent study. The research was done by BasePoint Analytics, which helps banks and lenders identify fraudulent transactions; the study looked at more than three million loans from 1997 to 2006, with a majority from 2005 to 2006. Applications with misrepresentations were also five times as likely to go into default.
Which prompts the question: are "we as a society" (read: government nannies) going to bail out fraudulent borrowers?
-Max Borders
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