www.800debthelp.com predatory lending consumer credit nationwide
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Predatory LendingConsumer Credit Nationwide
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Defined…
• Any of a number of fraudulent, deceptive, discriminatory, or unfavorable lending practices. Many of these practices are illegal, while others are legal but not in the best interest of the borrowers. www.Investorwords.com
• Predatory lending is defined as intentionally placing consumers in loan products with significantly worse terms and/or higher costs than loans offered to similarly qualified consumers in the region for the primary purpose of enriching the originator and with little or no regard for the costs to the consumer.www.mortgagebankers.org
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Who do predatory lenders target?
• People “desperate” for help
• Poor people• Minorities• Single mothers• People with low credit
scores.• Elderly• People uneducated about
finances– www.freddiemac.com
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How do you spot a dishonest lender?
• Be suspicious of anyone offering “bargain loans”
• “No credit? No problem” promises
• Anyone who contacts you first or just shows up on your doorstep.
• Large upfront fees to do the loan
• www.aarp.com
• Extremely high interest rates
• Broker fees or other unnecessary costs like pre-paid life insurance
• Encourage you to borrow more than the value of your home
• Beware of terms that change at the last minute
• www.freddiemac.com
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Common Predatory Practices: Home Loans
• Equity Stripping• Hidden Loan Terms: The Balloon Payment• Loan Flipping• The “Home Improvement” Loan• Credit Insurance • Mortgage Servicing Abuses• Signing Over your Deed
» www.ftc.gov
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Common Predatory Practices: Payday Loans
• Triple Digit Interest Rate
• Short Minimum Loan Term
• Single Balloon Payment
• Loan Flipping (extensions, rollovers)
• Simultaneous borrowing from multiple lenders
• No consideration of borrowers ability to pay
• Deferred check mechanism
• Mandatory arbitration case
• No restrictions on out-of-state banks violating local state laws
www.responsiblelending.org
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Do’s & Don’ts
• Do’s– Read the fine print
– Ask questions– Shop around– Know cancellation
terms– Research of your own
beforehand
• Don’ts– Sign something you
don’t understand– Let someone pressure
you into paying more than you know you can afford.
– Sign a blank document– Misrepresent your
financial status to get a loan.
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Finding an Honest Lender
• Shop around– Banks, Credit Unions, Mortgage Companies– Compare total costs of the loan as well as the interest rate.– Points and fees are complicated, make sure you understand
them.
• Be cautious– Loan with a lower payment isn’t always the better deal; it
may have a balloon payment in a few years.
• Ask questions– Always ask questions until you understand everything
» www.aarp.org
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Getting Help in Illinois
Illinois Dept of Financial and Professional Regulation
Division of Financial Institutionswww.idfpr.com
888-298-8089
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Getting Help in Iowa
Consumer Protection Division Attorney General of Iowa
Hoover State Office Building 1300 E. Walnut, Des Moines, Iowa 50319
515-281-5926
www.IowaAttorneyGeneral.org
E-mail: [email protected]
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Consumer Credit Nationwide
www.800DebtHelp.com800-Debt-Help (332-8435)