Being a Responsible Home Owner Predatory Lending

1. Being a Responsible Home Owner Predatory Lending

2. Objectives • Define Predatory Lenders • Explain How to Protect Yourself from Predatory Lenders • Determine Where to Find Assistance If You Are a Victim of Predatory Lenders

3. Predatory Lenders • Lenders who purposely target individuals of low-to-moderate income who may have difficulty getting loans from other sources. • Predatory lenders have been known to sell loans with outrageous fees or rates and misleading terms.

4. Predatory Lenders Predatory Lenders vs. Sub-Prime Lenders Sub-prime lenders make loans at higher interest rates to individuals who do not have good credit and who need to borrow money.

5. Characteristics of Predatory Lenders • Forge Documents. • Steer people into high-interest-rate loans. • Put people in loans with hidden balloon payments.

6. Characteristics of Predatory Lenders • Add prepayment penalties. • Require credit insurance. • Practice flipping techniques.

7. Predatory Lenders Might: • Review closing documents FAST! • Inflate the appraised value of property. • Encourage customers to lie about their income. • Not report a payment history. • Distract attention from the loan during closing. • Do just about anything to gain trust.

8. Predatory Lenders Might: • Close a loan when time is limited. • Close a loan in-house. • Find people who might be willing to consolidate their loans. • Target desperate homeowners who are at risk of foreclosure.

9. Predatory Lenders Might: • Offer one-stop shopping. • Target individuals willing to take risky loans. • Forcefully market their products. • Eliminate customers’ right to sue by making them sign an arbitrary clause.

10. Predatory Lenders Might Say: • “No Credit! No Problem!” • “Easy, quick cash!” • “You have wasted my time.” • “How can you pass up this great deal?” • “This is the only time I will be able to qualify you for this loan.”

11. Predatory Lenders Might Say: • “I have spent so much time trying to help you get this loan.” • “Do you need additional money to take a vacation, pay for school expenses, make home improvements, etc?” • “I can consolidate all your expenses into one loan and give you a lower monthly payment.”

12. Predatory Lenders Might Say: • “Don’t worry about the high interest rate. We can always refinance your loan and lower your interest rate.” • “Just make your payments on time for a couple of months and then you will be seen as a good customer. That way we can get you a lower interest rate.”

13. Protect Yourself From Predatory Lenders • Shop around. • Do not give in to high- pressure sales tactics. • Consider TOTAL cost of the loan – Not just mortgage payments. • Do not trust promises to refinance later. • Never make impulse decisions on a loan product. • Do not be afraid to question the loan officer.

14. Protect Yourself From Predatory Lenders Signing a Loan • Only sign when you are 100% comfortable with the loan terms. Do NOT sign: • Any blank documents • Anything you do not understand • If the loan officer is not willing to answer all your questions

15. Protect Yourself From Predatory Lenders Watch out for these items: • Prepayment penalties • Unreasonably high rates • Balloon payments

16. Protect Yourself From Predatory Lenders Things to Say: • NO! • I am not interested. • I am not ready to make a decision. • If I have to make a decision today, I am out of here.

17. Protect Yourself From Predatory Lenders

18. Victim of Predatory Lending The New Mexico Attorney General (505) 222-9000 Fair Lending Center (505)242-4755 ACORN (505) 242-7411 NACA (National Associates of Consumer Advocates) (202) 452-1989

19. Summary • Defined Predatory Lenders • Explained How to Protect Yourself from Predatory Lenders • Determined Where to Find Assistance if You Are a Victim of Predatory Lenders