A predatory loan is a deceptive tactic in which a lender takes advantage of a borrower. Companies will target those facing financial difficulties with unrealistic terms that they know the consumers will be unable to afford, such as mortgages. It is estimated that $9.1 billion are lost annually by borrowers to predatory mortgages. Our South Florida foreclosure attorneys provide information to aid in identifying and avoiding these deceitful lenders.
What is Predatory Lending?
The practice is identified as loans that disregard the basic principles of underwriting with terms that do not benefit the customer. Deceptive lending in mortgages has increased in recent years. This is done through the use of unrealistic agreement terms, hindering of repayment, or leveraging a lack of understanding on the part of the borrower. That is, a lender will take advantage of a borrower that cannot make the payments and will inevitably default.
Aspects of predatory lending include unreasonable conditions such as:
- Excessive fees
- Insufficient disclosure of risks and costs
- Unfair penalties
- Undisclosed charges
- Exorbitantly high-interest rates for high-risk borrowers
- Extreme balloon payments
How to Avoid Predatory Lending
Federal laws are put into place through the Equal Credit Opportunity Act making it illegal for a lender to increase interest rates based on a borrower’s race, religion, gender, or age. Consumers can protect themselves from unfair lending through research and being aware of the following warning signs:
- Aggressive tactics
- Unlicensed creditors
- Unrealistic offers
- High-interest rates
- Unreasonable fees
- Pressure to sign the agreement
In the event that a consumer is unsure of the legitimacy of a loan, it is advisable to have the document reviewed by a trusted attorney.
Predatory Lending Foreclosure Defense
Homeowners facing foreclosure due to predatory lending practices have legal rights to pursue justice. An experienced attorney will fight for you by identifying illegal practices and seeking modifications or cancellation of the debt in court.
Whether you are uncertain about the validity of a loan or have been the victim of predatory lending, contact the South Florida foreclosure attorneys at Graham Legal, P.A. today. Our dedicated legal team will fight for your rights as a consumer.