Housing Crisis Creates Larger Problems

By McFarlin, LLP

The housing crisis has

unfortunately revealed yet

another issue in the real estate

market.

According to a post created for the McFarlin, LLP website, some lenders are taking advantage of

the dire housing market to attempt schemes and tricks

against their loan applicants.

The resulting scam is entitled

predatory lending practices, and large banks and sub prime

lenders typically engage in the

fraud.

Essentially, this scam involves exploiting homeowners until

they are buried in debt.

There are two separate types of predatory lending practices.

First, there are lenders who extend abusive loan terms.

This is when a lender offers high interest rates and fees,

producing balloon payments, extreme penalties for late

payments and large upfront fees.

Unfortunately, this means of predatory lending practices often leads to foreclosure proceedings; the lender may utilize foreclosure

fraud to further abuse the already tricked homeowner.

The second means of engaging in predatory lending practices is entitled

discriminatory targeted marketing.

Essentially, this requires the bank to use public information to locate vulnerable individuals—people they think may fall victim to schemes.

It should be noted that it is not illegal to market to a large audience; however, legality

becomes an issue when banks use marketing to exploit groups of

consumers.

In this method, targets are engaged in discussions, in which certain important facets of information about the loan are omitted, resulting in consumers that are tricked into a deal they

cannot afford.

In both of these methods, victims fall behind on their payments, making it

very difficult for the consumer to save their home or protect their credit.

As a result, many fall to

foreclosure, as opportunities to

save the home are missed, due to a

lack of knowledge in

their legal rights.

Therefore, the presentation urges that any consumer that feels suspicious

about their treatment at the hands of a lender contact a legal consultant, just to make sure the loan terms and deal are all legal and in the best interest of

the borrower.