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WATCH OUT FOR PREDATORY LENDERS

Source: Illinois Association of Realtors

Here are some warning signs:

•verification” regardless of borrower’s current employment, credit history, and assets. These claims indicate the lender doesn’t care about whether you can afford to make the payments over the long haul.

•fees than are typical in your market. Because these costs can be financed as part of the loan, they are easy to disguise or downplay. On competitive loans, fees may be negotiable.

It is common for home buyers to pay only 1 percent of the loan amount for prime loans. By contrast, a typical predatory loan may cost 5 percent or more.

•where the payment rises a lot after the “teaser rate” period are seldom appropriate for families who already have had problems repaying other loans. Home buyers should avoid large single “balloon” payments (a lump sum due at the end of the loan’s term).

•commitment on a reasonably priced loan expires.
•excessive fees to be included in the loan and result in the borrower owing more to the bank than the home is worth.

•it hard for a borrower to refinance in order to pay off a high-cost loan by taking advantage of a low-cost loan.

•two mortgages, with one having a much higher cost. Home buyers should be sure they can afford the payments.

•brokers always require you to sign key loan papers, and never ask you to sign a blank document or a document dated before the date you sign.


 

ADDITIONAL RESOURCES

For immediate advice on how to avoid foreclosure. Available in English and Spanish, 24/7. Or visit www.995hope.org for more information.

HUD Resources:

•go to www.hud.gov/counseling aimed at borrowers with FHA-insured mortgages, but can help other borrowers as well. Go to www.hud.gov/foreclosure.

Freddie Mac: Investment. This brochure by typing in the full name of the brochure.

Ginnie Mae: estimate how much they can afford to spend, read “How.

Much Home Can You Afford?” http://www.GinnieMae.gov

“Looking for the Best Mortgage”

11 federal agencies on how to shop, compare, and negotiate

the best deal on a home loan.

www.federalreserve.gov/pubs/mortgage/mortb_1.htm

Americans for Fairness in Lending:

resources related to a variety of lending issues, go to

www.affil.org

Consumer Handbook on Adjustable Rate Mortgages

(the “CHARM” booklet)

Board (FRB) and the Office of Thrift Supervision (OTS).

http://www.FederalReserve.gov

on “publications and education resources” and then on

“consumer information brochures.”


Credit-reporting agencies:

*Equifax 800.685.1111 www.Equifax.com *Experian 888.397.3742 www.Experian.com *TransUnion 800.916.8800 www.TransUnion.com

Go to www.AnnualCreditReport.com to ask for a free copy

of your credit report, once a year, or call 877.322.8228.


COUNSELING RESOURCES

Non-profit organizations dedicated to helping consumers

avoid foreclosure can be invaluable.

•Homeownership Preservation Foundation to support a nationwide assistance number—888.995.HOPE. You can speak with a counselor, day or night, to help you get back on track financially. (English and Spanish)

•Watch out for questionable counseling companies who advertise that, for a minimal fee, they will assist homeowners by hiring a lawyer to defend the foreclosure in court or negotiate lender assistance on the borrowers’ behalf. You should call a HUD-approved counseling organization, a local NeighborWorks® organization, or 888.995.HOPE before you pay or sign anything.