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Awareness Is Key To Identifying Predatory Lending Practices
Five Signs of Predatory Lending:
- Was Claimant approached and asked to take out a loan against the equity in their home? Predatory lenders are aggressive about marketing their product. Solicitations for predatory loans come by mail, over the phone and from people knocking on the door.
- Did they encourage Claimant to make home improvements? Predatory lenders can increase the size of a loan by convincing borrowers their home needs a new porch, windows or roof and then grossly overcharge for the work.
- Was Claimant asked to refinance a first mortgage or to consolidate credit card debt in a home loan? Predatory lenders want to increase their earnings by consolidating your debt into their loan and charge you higher rates of interest and high fees.
- Was credit insurance, life insurance, disability insurance or another form of insurance included in the loan? Offering essentially worthless insurance at high premiums and rolling the cost into the mortgage provides almost pure profit for the lender.
- Is there a prepayment penalty on the loan? Predatory lenders do not want you to pay off your loan. They want you to keep paying their high interest rates so they charge significant fees for early loan payoff.
If the answer to any of these questions is yes, Claimant may have a predatory loan - a loan for which they are paying much more than they should and which could put their home at risk of foreclosure. If Claimant was targeted for this type of loan based on any of the protected classes under the Elliott-Larsen Civil Rights Act or PWDCRA, Claimant may be a victim of unlawful discrimination.