Avoid Predatory Lenders Johanna Hahn Senior Extension Agent, FCS Virginia Cooperative Extension

Don’t get ripped off! Be Cautious - be suspicious of anyone who offers you “bargain loans.” Slow Down - Never act quickly. Shop Around - You make the first contact. Not the other way around

Don’t get ripped off Avoid balloon payments Ask questions, ask questions Read carefully before you sign

Don’t get ripped off! You can change your mind Think about a reverse mortgage Get help if you think you have an unfair loan

Payday Loans = Costly Cash Ads on TV, radio, strip malls Short-term, high-rate loans NEVER hand over a signed check Roll-overs

Alternatives to Payday Loans Consider the possibilities before choosing a payday loan Look for the credit offer with the lowest annual percentage rate Consider a loan from credit union, family or community-based organization

Talking with creditors Compare the APR and the finance charge (which include loan fees, interest and other types of credit costs) Ask your creditors for more time to pay your bills. Communicate

Tools for avoiding predatory lending Make a realistic spending plan Build an emergency fund Is overdraft protection available? Credit Counselors

Your rights If you believe a lender has violated the Truth In Lending Act, you can file a complaint

How to Identify Predatory Mortgage Loans Warning Signs that a loan may be abusive or predatory Misrepresentation or fraud in the solicitation, marketing or origination of the loan Home improvement scams High interest rate. Can’t be justified

How to Identify Predatory Mortgage Loans Balloon payments - large lump sum of $$ due at the end of the term of the loan. Excessive prepayment penalty Multiple refinancing Credit insurance Negative amortization

More warning signs…. Mortgage broker kickbacks Making loans the elderly homeowner cannot afford to repay Refinancing unsecured debt

Legal Challenges to Predatory Loans Truth in Lending Act Home Ownership and Equity Protection Act Real Estate Settlement and Procedures Act State Unfair and Deceptive Acts and Practices Laws

Legal Challenges to Predatory Loans Equal Credit Opportunity Act Fair Housing Act