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Avoid Predatory Lenders

Avoid Predatory Lenders. Johanna Hahn Senior Extension Agent, FCS Virginia Cooperative Extension. Don’t get ripped off!. Be Cautious - be suspicious of anyone who offers you “bargain loans.” Slow Down - Never act quickly. Shop Around - You make the first contact. Not the other way around.

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Avoid Predatory Lenders

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  1. Avoid Predatory Lenders Johanna Hahn Senior Extension Agent, FCS Virginia Cooperative Extension

  2. Don’t get ripped off! • Be Cautious - be suspicious of anyone who offers you “bargain loans.” • Slow Down - Never act quickly. • Shop Around - You make the first contact. Not the other way around

  3. Don’t get ripped off • Avoid balloon payments • Ask questions, ask questions • Read carefully before you sign

  4. Don’t get ripped off! • You can change your mind • Think about a reverse mortgage • Get help if you think you have an unfair loan

  5. Payday Loans = Costly Cash • Ads on TV, radio, strip malls • Short-term, high-rate loans • NEVER hand over a signed check • Roll-overs

  6. Alternatives to Payday Loans • Consider the possibilities before choosing a payday loan • Look for the credit offer with the lowest annual percentage rate • Consider a loan from credit union, family or community-based organization

  7. Talking with creditors • Compare the APR and the finance charge (which include loan fees, interest and other types of credit costs) • Ask your creditors for more time to pay your bills. Communicate

  8. Tools for avoiding predatory lending • Make a realistic spending plan • Build an emergency fund • Is overdraft protection available? • Credit Counselors

  9. Your rights • If you believe a lender has violated the Truth In Lending Act, you can file a complaint

  10. How to Identify Predatory Mortgage Loans • Warning Signs that a loan may be abusive or predatory • Misrepresentation or fraud in the solicitation, marketing or origination of the loan • Home improvement scams • High interest rate. Can’t be justified

  11. How to Identify Predatory Mortgage Loans • Balloon payments - large lump sum of $$ due at the end of the term of the loan. • Excessive prepayment penalty • Multiple refinancing • Credit insurance • Negative amortization

  12. More warning signs…. • Mortgage broker kickbacks • Making loans the elderly homeowner cannot afford to repay • Refinancing unsecured debt

  13. Legal Challenges to Predatory Loans • Truth in Lending Act • Home Ownership and Equity Protection Act • Real Estate Settlement and Procedures Act • State Unfair and Deceptive Acts and Practices Laws

  14. Legal Challenges to Predatory Loans • Equal Credit Opportunity Act • Fair Housing Act

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