Kearns makes changes to slow down ‘predatory lending’


Erie County Clerk Michael Kearns says he is not going to allow his office to become a sanctuary for predatory lenders.

At issue is a legal tactic known as a “confession of judgment” which leaves sub-prime borrowers at a lender’s mercy,  and it has given Erie County the dubious distinction of being number one in the state.

Kearns is referring to a practice sometimes used by creditors when they lend money to a sub-prime borrower–usually a small business with a less-than-steller credit rating–and compel the debtor to sign a confession of judgment.

The transaction allows the creditor to sidestep state lending regulations because it is considered a “cash advance’ rather than a loan, and if the lender declares the borrower to be in default, the creditor can seize the debtor’s money and assets, while the borrower has no legal remedy to fight back.

New York law allows lenders outside of Erie County–even outside of New York–to process those documents through county clerks’ offices.

In a series of reports, Bloomberg News found Kearns’ office leads the state, having approved 5,200 confessions of judgment between 2012 and 2018, followed by Westchester County, Orange and Ontario Counties.

Kearns has changed office policy, and as of January first he is no longer processing confessions of judgment that originate outside of Erie County.

“Most of these people, when they find out they don’t have attorney representation, they don’t have the recourse of a court, when they find out these people have have frozen their accounts and they lose everything, they lose their business based on one bad decision.”

Now that Kearns has decided to refuse confessions of judgment that originate outside of Erie County, other county clerks in New York are following his lead.

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