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I love your attitude towards debt, borrowers, and lenders. For several years I worked at a mid size credit union as both a lender and a collector. I tried to follow the approach you advocate. Borrowers need to exercise restraint, know (and care about) what they are signing, and be committed to some kind of consistent plan to get ahead financially. Lenders need to be honest, look out for the best interests of their borrowers, and exercise compassion and common sense if problems arise. As a collector I found the credit union was better off if I really worked with delinquent lenders, and I tired very hard to not destroy the good will and moral obligation to repay that borrowers felt by how I treated them. I had many borrowers make extraordinary efforts to repay loans when they were going through some rough times, and I hope that I reciprocated by how I treated them.
There are many enormous advantages to the securitization of loans and the increasing reliance on credit scores for lending. The underwriting process is quicker and more efficient, capital moves easily between different regions of the country, spreads between what savers receive and borrowers pay are narrower etc. However one valuable element that is lost is the personal connection between borrower and lender. I believe, that properly maintained, that connection produces much better behavior from both borrower and lender.
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