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If this is your first visit, welcome! This site is devoted to my life experiences as a Filipino-American who immigrated from the Philippines to the United States in 1960. I came to the US as a graduate student when I was 26 years old. I am now in my early-80's and thanks God for his blessings, I have four successful and professional children and six grandchildren here in the US. My wife and I had been enjoying the snow bird lifestyle between US and Philippines after my retirement from USFDA in 2002. Please do not forget to read the latest national and International News in this site . I have also posted some of my favorite Filipino and American dishes and recipes in this site. Some of the photos and videos in this site, I do not own. However, I have no intention on infringing on your copyrights. Cheers!

Thursday, July 10, 2014

What Do You Know About Predatory Lenders and their Practices?



I am in the process of refinancing my home mortgage to avail myself of the low interest rates, thus lowering my monthly mortgage payment. Because of a large number of mortgage lenders and banks offering their business to me via e-mail, letters and telephone calls, I want to be sure that I will not be a victim of predatory lenders. So I did a little Internet search and was surprise to learn that the bank I am currently negotiating for refinancing is in the list of predatory lenders. I made sure however that my loan will have a no prepayment penalty, otherwise I still do not know the details of the loan, since I am still waiting for the welcome package which will include the Good Faith Estimate. Here's some of the information I found in the Internet about predatory lenders and some of their practices.

"Predatory lending is a fraudulent, unfair and a deceptive type of lending during a loan process. In the United States there is no legal definition of a predatory lender. The FDIC defines predatory lending as imposing unfair and abusive loan terms onto borrowers. There are laws against these types of loans. Some other types of loans that are considered predatory many include payday loans, credit cards, and other forms of consumer debts. A list of predatory lenders include Bank of America, Wells Fargo, and JP Morgan Chase". Reference: en.wikipedia.org

Although no official legal definition exists for predatory lending, many of the practices used in predatory lending are illegal. Predatory lenders often take advantage of inexperienced, uneducated or desperate borrowers, and have no consideration of the borrower's best interest or ability to repay the loan. These loans rarely benefit the borrowers, and instead increase their risk of future foreclosure and debt.

Lenders engaged in predatory lending practices use deception to convince borrowers to agree to an unfair or abusive loan, according to the Center for Responsible Lending.

The most common--and best-known--types of predatory lending involve payday loans, overdraft loans, unnecessary sub-prime mortgages, loan flipping and credit cards with unreasonably high interest rates.

Predatory lenders use the following unfair practices during the loan origination process: risk-based pricing, misrepresentation of loan terms and conditions, alteration of terms and conditions after document signing, disproportionately high fees or interest rates on short-term loans, and deceptive or aggressive marketing techniques.

According to HUD, predatory lenders often focus their efforts in communities with a high percentage of minority, poor or elderly residents--places where better loans are not as easily acquired.

One practice often hidden in fine print is the inclusion of prepayment penalties. These penalties take effect if the borrower decides to repay early or obtain a new loan with lower rates, and are often as high as 5 percent of the original loan amount".

Personal Note:I was assured by my loan specialist that there will be no prepayment penalty in my loan application.

Reference : http://www.ehow.com/facts_4887804_what-predatory-lender.html

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