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CHALLENGES TO HOMEOWNERSHIP: Predatory Lending and Other Homeowner Fraud

CHALLENGES TO HOMEOWNERSHIP: Predatory Lending and Other Homeowner Fraud. Housing Forum May 20, 2005. Stephen H. Olden Legal Aid Society of Greater Cincinnati 215 E. Ninth Street, Suite 200 Cincinnati, OH 45202 (513) 241-9400 solden@lascinti.org. New Buyers.

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CHALLENGES TO HOMEOWNERSHIP: Predatory Lending and Other Homeowner Fraud

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  1. CHALLENGES TO HOMEOWNERSHIP:Predatory Lending and Other Homeowner Fraud Housing Forum May 20, 2005 Stephen H. Olden Legal Aid Society of Greater Cincinnati 215 E. Ninth Street, Suite 200 Cincinnati, OH 45202 (513) 241-9400 solden@lascinti.org

  2. New Buyers • Predatory home purchase loans • Hidden defects in home • Sharp loan servicing practices

  3. Current Owners • Predatory refinance loans • Shoddy home repairs/remodeling • Misunderstood reverse mortgages

  4. Outcomes for Homeowner • Financial struggles/depleted savings • Ruined credit • Foreclosure/sheriff sale

  5. Outcomes for Neighborhood • Foreclosures • “Investors”/speculators in neighborhood • Declining neighborhood

  6. Fair Housing Phenomenon • Prime lenders and redlining • Sub-prime lenders and reverse redlining

  7. Foreclosures Filed in Hamilton County

  8. Predatory Loans • Sub-prime lender • Appraiser • Broker • Title company • Others?

  9. Warning Signs • High interest rate • High closing fees • Balloon payment/adjustable payments • Falsified loan application • No real benefit to borrower • Home repair scam • Debt consolidations (often unsecured debt)

  10. Targeted Victims • Elderly • New, young • Minorities

  11. Elderly • High equity in homes • Trusting, ripe for con artists • View crime as physical and with weapons

  12. New, Young • “American Dream” is appealing • Lack financial knowledge

  13. Minorities • Lack of access to credit channels • Reverse redlining • Discriminatory loan terms

  14. Home Purchases/Home Repairs • Property flipping and “ugly houses” • Investors • Fly-by-night contractors

  15. Sharp Loan Servicing Practices • Junk fees, charges • Unaccounted-for payments • “Lapsed” insurance • Hasty foreclosures

  16. Misunderstood Reverse Mortgages • Complexities • Equity depletion • Alternatives not explored

  17. What’s Being Done? • Consumer education/counseling • Industry clean-up • Law enforcement • Legislation • Litigation

  18. Fountain Pen Predators Yes, as through this world I’ve wandered I’ve seen lots of funny men; Some will rob you with a six-gun, And some with a fountain pen. And as through your life you travel, Yes, as through your life you roam, You won’t never see an outlaw Drive a family from their home. Woody Guthrie Pretty Boy Floyd (1939)

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