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Predatory Lending

Predatory Lending. Consumer Credit Nationwide. 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

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Predatory Lending

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  1. Predatory Lending Consumer Credit Nationwide

  2. 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

  3. 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

  4. 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 How do you spot a dishonest lender?

  5. 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

  6. 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 Common Predatory Practices: Payday Loans

  7. 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. Do’s & Don’ts

  8. 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

  9. Getting Help in Illinois Illinois Dept of Financial and Professional Regulation Division of Financial Institutions www.idfpr.com 888-298-8089

  10. Getting Help in Iowa  Consumer Protection DivisionAttorney General of Iowa    Hoover State Office Building    1300 E. Walnut, Des Moines, Iowa 50319    515-281-5926 www.IowaAttorneyGeneral.org E-mail: Consumer@ag.state.ia.us

  11. Consumer Credit Nationwide www.TooMuchDebt.com 800-Debt-Help (332-8435)

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