Beware of Predatory Mortgage Lenders

The Fair Housing Act (Title VIII of the Civil Rights Act of 1968) prohibits discrimination in the sale, rental, and financing of dwellings, and in other housing related transactions, based on race, color, national origin, religion, sex, familial status (including children under the age of 18 living with parents or legal custodians, pregnant women, and people securing custody of children under the age of 18), and handicap (disability).

When you are considering buying a home follow these 8 tips to prevent being a victim of predatory lending and discrimination:

1.     Do you research before applying for a mortgage loan

2.     Shop around to several lenders before making a selection

3.     Ask questions if you don't understand something

4.     Take the paperwork home and read it over, contact a real estate lawyer or law school student to help explain any legal terms and information you don't understand

5.     Make sure all of your questions regarding the loan are answered 

6.     Make sure you are comfortable with the terms provided

7.     If the terms keep changing find another lender to do business with

8.     When all else fails go with your gut instinct, if it seems too good to be true it probably is

Also refer to the Housing and Urban Development Fair (HUD) cHousing website for more information on predatory lending and how to protect yourself or file a complaint at hud.gov. You can also file complaints with HUD or the Consumer Financial Protection Bureau consumerfinance.gov or the Better Business Bureau at bbb.org. 

Can the CARD Act Stop Creditor Tricks to Keep You in Debt

Credit card companies use hundreds of tricks and gimmicks to keep consumers in debt. According to R.K. Hammer, the credit card penalty fees revenue will reach $20.5 billion in. Credit cards generate more than $2.5 trillion a year. The credit card industry is one of the largest fraud industries in the country. Here are some common traps credit card companies use to keep consumers in debt.

1. The minimum payment trap keeps consumers in debt and in most cases is not enough to cover the interest and finance charges that accrue each month which is why when you send in a payment your balance either doesn't go down or only goes down by a few dollars.

2. No maximum interest rate for credit cards and is not government regulated. Interest rates are regulated by each state.

3. High late fees are charged either when payments are sent after the due date or sent on the due date although the payment was received on time.

4. Credit card monitoring and credit card insurance. There is no need to purchase credit card insurance because there are so many stipulations when signing up for the insurance that it is to your advantage live below your means to pay down debt.

5. Some credit card term change as the wind blows and makes it difficult for consumers to keep up with the changes.

6. The credit card agreement or disclosure is created using fine print to make it difficult for most consumers to read and those who try to read it get frustrated because of the fine print. However, this document is very important and should be read because it tells you all of the restrictions and guidelines for using the credit card.

7. The payment address or due date may change as a way to confuse consumers so their payment arrives late and they get charged a late fee.

The CARD Act of 2009 will eliminate many of these creditor tricks but the credit card companies will still find ways to work around the law to make money. It is best that you read everything you receive from your credit card company, ask questions and know your rights as a consumer. You can find information on the ftc.gov/credit site.

Want a 79.9% Credit Card Interest Rate

There is no federal limit on credit card interest rates so consumers can be charged any rate. Credit card interest rates are usually between 6-36%. Unfortunately, the CARD Act of 2009 that goes into effect in February 2010 will not address this issue that has been plaguing consumers for years. According to NBC San Diego, the First Premier Bank also known as Premier Bank is offering some consumers a pre-approved credit card with a 79.9% interest rate.

The card also requires additional fees such as an account setup fee, program fee, monthly servicing fee and additional card fee which total an additional $199 a month without making any purchases. The credit card offers a limit of $250. The fees are charged on the first month's bill leaving only a $51 remaining balance.

Credit card interest rates are regulated by each state and as we can see interest rates can be any rate a credit card company desires.

Previously the highest interest rates I knew of were 32-36% by a former client of mine. I thought that was insane but 79.9% beats that by a landslide.

This is a real example of why consumers need to repair their credit, pay down their debt and increase their credit score so they won't ever receive these types of pre-approved offers in the mail.

A Victory for Mortgage Borrowers

Many Americans shopping for a home experience obstacles such as: lenders or mortgage companies losing paperwork, administrative delays, unexpected errors on credit reports, unexpected fees and settlements costs, predatory lending, and unethical and deceptive practices. Buying a home is one of the most frustrating, scary and stressful processes in life. As the saying goes "only the strong survive" and only the strong are able to handle the pressure that is felt when trying to purchase a home.

The amount of paperwork provided to potential homeowners at settlement ranges on average from 30-70 pages of documents that must be read and signed. Although many homeowners neglect to read the paperwork which can hurt them in the future. Even if you take the time to read the paperwork, all of the technical jargon used is difficult to understand and it takes a lawyer to help you decipher the jargon.

Well, help is here. The Federal Reserve board implemented new rules that prohibit deceptive lending practices involving loans that are made on or after October 1, 2009 but unfortunately does not help those who were misled during the past two years.

The new rules require that disclosures must be provided in a timely manner, ensuring accurate appraisals are provided which will prevent a potential homeowner from borrowing too much money or overpaying for a home, handling of loan payments in a timely manner to prevent unnecessary late fees (in some instances borrowers are charged late fees although their payments were received on time), and inform borrowers about deducting late payment fees from their monthly mortgage payment.

Lenders will continue to be required to provide early disclosures to borrowers for loans to purchase a primary residence but will also have to provide early disclosures for refinances and home equity loans.
Additional protections include protecting subprime loan borrowers from receiving expensive mortgages by ensuring early disclosures of mortgage terms and costs and to verify the borrower's income, assets and other debts when offering a subprime loan.

A minimum of seven business days must pass between when a lender delivers the early disclosures to a borrower and closing. The borrower must receive a corrected disclosure at least three business days before the loan closing if the Annual Percentage Rate (APR) increases by a certain amount above what was previously disclosed to the borrower.

Starting October 1, 2009, Federal rules will ban several deceptive or misleading advertising practices. The rule prohibits any advertisement from indicating that a rate or payment is "fixed" when it can change. The new rule also requires advertisements to show all interest rates or payment amounts with equal spacing and in close proximity to any low promotional rate or payment.

Starting January 1, 2010, the Department of Housing and Urban Development (HUD) will require lenders and mortgage brokers to use the same form to provide good faith estimates of settlement costs and disclosures. It will also include changes to HUD's Uniform Settlement Statement (HUD-1 form) that will make it easier for borrowers to compare estimated costs to actual costs. HUD's rules will limit how much actual costs can increase above the estimates and hopes the new rules will each homeowner approximately $700 at closing.