Predatory Lending

Predatory lending seems to be the leading cause of our current housing epidemic. Pushy salesman and forged documents got people into mortgages they couldn't afford to repay. Unfortunately most of the homeowners were unaware of the excessive points and fee's that were incorporated into their mortgage. To add insult to injury many of these sub-prime type mortgage contracts contained clauses that skyrocketed interest rates if the homeowner was late on a payment or the interest rates they thought they were going to pay for the life of the loan were only "introductory rates" and they too raised after a few years. Predatory lenders prey on individuals who are in need of cash and have equity in their home. The problem with asset based lending is they give you a loan based upon the amount of equity in your home and not your ability to repay the loan. Homeowners soon find themselves in debt with no equity left in their home to borrow from and often times in a much worse position then they started in.

Predatory lending occurs everywhere and can happen to anyone, however it is more common among minority communities. Predatory lenders intentionally seek out consumers who may not speak fluent English or don't have extensive knowledge of the laws governing lending. It makes their sale that much easier to make when someone doesn't know what required documents and disclosures are required to be given to them. They never receive a breakdown of the finance charges, so they have no idea of any absorbent fee's the lender has attached to their loan. Now more than ever Americans understand what a huge impact predatory lending has had on our country. Citizens are losing their homes to foreclosure in record high numbers and the amount of debt Americans carry is the highest its ever been. We need to learn from our mistakes to ensure a prosperous future. There will always be individuals preying on the weak in the hopes to make a quick buck. It is now our individual responsibilities to educate ourselves on the laws governing lending to prevent falling victim to any type of financial scam. Now that we know what a profound effect predatory lending has bestowed on our country, it's important to start looking out for scams and not becoming a victim to one. Here are 5 warning signs that may indicate you're dealing with a predatory lender:

1. Pushy salesman that pressure you into accepting high risk loans with high prepayment penalties and interest only payments.

2. Loans that require mandatory arbitration. These loans prevent you from taking legal action against the lender or loan originator.

3. If your asked to falsify information on your application ( such as your income) or leave any signature lines blank.

4. Your loan has a large balloon payment at the end. Consumers are often tricked into accepting loans with a large balloon payment at the end of the loan. These loans seem great because of the low monthly payments until you owe a large lump sum at the end of the loan. These balloon payments can top $100,000 and most consumers do not have that type of capital laying around to pay it off.

5. If your lender uses bait and switch techniques to lure you in. This is where you are promised a great low interest loan until you come in to sign the papers and you realize the interest rates are higher along with almost everything else.

As you can see there are many ways a predatory lender can take advantage of you. When shopping for a loan, it's important to shop around to many different lenders and compare the rates they have given you. If something seems too good to be true, it probably is. Speak with a knowledgeable person that you trust to help you reach right decision. If you feel that you were a victim to predatory lending call the CreditLawgroup at (800) 508-0041 to speak to someone about your loan. You can also visit our website.