Predatory Lending

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Predatory Lenders

I. How to spot a predatory lender
II. How to protect yourself from predatory lenders

How to protect yourself from predatory lenders

Many state and government laws provide some protection from exploitive lenders. But the best way to avoid becoming the prey of predatory lenders is to protect YOURSELF from their tricks.

You do not have to go it alone
Securing a home mortgage or home equity loan is a major financial move. It should be taken very seriously. Getting pre-loan counseling:

Consumer Credit Counseling Service
(800) 777-PLAN
Evaluates loans and offers counseling on foreclosure, default and debt management.

Free information regarding predatory lending is provided by the American Association of Retired Persons (AARP). Access this information by mail:
AARP,
601 E Street,
NW, Washington, DC 20049

Or by phone: 1-800-424-3410 (Toll free)

Or visit: www.aarp.org/consumerprotect-homeloans

Please, do your homework
Check with as many lenders as possible and look for the lowest interest rates and overall cost. If your credit is bad, don't limit your self to subprime lenders only. Contact prime lenders to see if you qualify. Even if you don't, many prime lenders have subprime subsidiaries that may offer competitive rates.

Check a contractors license
In most states a contractor must be licensed before work can be done on a home. Check to see if you live in a states where that is required. If so, make sure the contractor is licensed. Also, ask the contractor for a list of pervious jobs and check the quality of the work he has done in the past.

Beware of home improvement contractors who recommend specific mortgage lenders.

Seek legal advice
If you are an inexperience borrower, make sure you have a lawyer present to go over each document before you sign it. If you cannot afford a lawyer, call your local bar association, which should be able to help you locate low cost legal services. Some non profit senior organizations will go over home equity loan contracts for you and offer advice. Also, a knowledgeable family or friend you trust might be able to offer guidance.

Check your credit report before you begin shopping for a mortgage
Some predatory lenders lie about your credit rating to justify charging you higher interest rates and adding unnecessary fees. Know what your credit rating is before hand, so you cannot be tricked into thinking it is lower than it actually is.

You can get a copy of your credit report for as little as $5 to 20. In some states you can get one for free.

Try acquiring a copy from one of the credit reporting agencies listed below:

Trans Union
TransUnion LLC
Consumer Disclosure Center
P.O. Box 1000
Chester, PA 19022
1-800-916-8800
www.transunion.com/index.jsp

Equifax
Equifax Credit Information Services, Inc
P.O. Box 740241
Atlanta, GA 30374
1-800-685-1111
www.equifax.com

Experian
National Consumer Assistance Center
PO Box 2002
Allen, TX 75013
1-888-524-3666
www.experian.com

Be sure to correct any errors you may find in your credit report. Inconsistencies and typographical errors are common.

The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at www.ftc.gov. The FTC enters Internet, telemarketing, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies worldwide.

The FTC regulates non-bank lenders and enforces several credit laws that protect consumers, including the Truth-in-Lending Act, Equal Credit Opportunity Act, and the Fair Debt Collection Practices Act. The FTC has two brochures about home equity loans, available by mail and on the agency's web site: www.ftc.gov

Federal Trade Commission (FTC) http://www.ftc.gov/
FTC Consumer Response Center
6th Street and Pennsylvania Avenue, N.W.
Washington, DC 20580;
(877) FTC-HELP (382-4357)
TTY: (202) 326-2502

National Association of Consumer Advocates
http://www.naca.net/
Consumer attorneys who are members of NACA are listed by area of expertise.
National Fraud Information Center
(800) 876-7060
Information and publications on fraud.

National Association of Attorneys General http://www.naag.org/
Helps you find your state attorney general (AG). Most state AG offices
handle complaints about deceptive or fraudulent business practices.

Previous: How to spot a predatory lender

Updated: Nov 2005