Deceptive lending practices a problem for the public as the recession and the home mortgage crisis gets worse. You can protect yourself from deceptive lending.
Victims of Deceptive Lending Practices
- Minority Groups – members of minority groups are a favorite target of unethical lenders, even in instances where the person could qualify for a loan with better interest rate and terms.
- Low Income and the elderly
- Families in Financial Burdens – deceptive lenders often take advantage of persons by promising to stop foreclosures or helping pay off bills
If you are a member of any of these groups, you should take special care in responding to any business that attempts to give you a loan.
Common Deceptive Lending Practices
Deceptive lending practices can take many forms. Some of the common ones are listed below.
- Flipping: often targets the first time homebuyer who may have bad credit or other financial issues. In these cases, the flipper buys the home, makes cosmetic repairs to the home, handles all of the paperwork, may even allow the home buyer to move in before the deal is complete. Flipper sells the home at an inflated price and buyer ends up with a home that is not worth what the buyer is paying.
- Loan Flipping: The lender encourages you to repeatedly refinance the loan and often, to borrow more money. Each time you refinance, you pay additional fees and interest points. That only serves to increase your debt.
- Insurance Packing: The lender adds credit insurance, or other insurance products, to your loan, which you may not need.
- Bait and Switch: The lender offers one set of loan terms when you apply, then pressures you to accept higher charges when you sign to complete the transaction.
- Equity Stripping: The lender gives you a loan, based on the equity in your home, not on your ability to repay based on your income. If you cannot make the payments, you could end up losing your home.
- Non-traditional Products: Many lenders offer loans in which the minimum payment does not cover the principal and interest due, causing your loan balance, and eventually, your monthly payments to increase. In addition, many of these loans have variable interest rates, causing your monthly payment to increase further if the interest rate rises.
- Deceptive Loan Servicing: The lender does not provide you with accurate or complete account statements and payoff figures. That makes it almost impossible for you to determine how much you have paid or how much you owe. You may pay more than you owe.
Can a Lawyer Help?
If you have been a victim of any of the above listed types of deceptive lending, you should submit your case for a free review from a Lawyer. These deceptive lending practices violate many state and federal laws involving discrimination related to sex, race and gender, fair dept collection, fair credit reporting and others. You may also have rights under state laws that would give you the right to file a lawsuit or modify terms of a loan agreement. You should consult with legal counsel to determine your rights under these laws.
Deceptive lending practices have become more prevalent as the economy worsens. Deceptive lending is a problem especially for minority groups, persons with low income or the elderly and persons with financial problems. Deceptive lending practices violate state and federal law. Consult legal counsel to protect your rights in this area.