PREDATORY LENDING & MORTGAGE LOAN PRACTICES
Making a real property investment, buying or refinancing a home, may be one of the most important and financially complex decisions a person will ever make. However, many borrowers, including seasoned investors and first-time homebuyers or seniors, become victims of predatory lending or mortgage loan fraud which can result in devastating financial effects.
Lending can become predatory when aggressive tactics are used to convince a borrower to agree to unfair or abusive loan terms and conditions. Predatory mortgage lending occurs when an industry party or institution, such as a real estate broker, mortgage broker, appraiser, lender or bank, willfully misleads or deceives a consumer into entering into a toxic loan for the sake of making an additional profit. Predatory lenders charge excessive fees, interest rates, and pre-payment penalties and often require balloon payments. Frequently, lending decisions are made without considering the borrower’s ability to repay, and predatory lenders may permit repeated refinancing over a short period of time without any economic gain for the borrower. Predatory mortgage lending is not only illegal, it can cause severe financial hardship or ruin for a borrower–often resulting in foreclosure, bankruptcy and irreparable damage to a customer’s credit rating.
Several laws are designed to protect consumers against predatory/abusive lending practices. On the federal level, the Truth in Lending Act (TILA) requires lenders to disclose the APR and loan terms, and the Home Ownership and Equity Protection Act, which is an amendment to TILA was specifically designed to identify predatory mortgage loans. On the state level California has its own anti-predatory laws that are designed to address abusive mortgage lending.
If you believe you or someone you know has been victimized by predatory mortgage lending or mortgage loan fraud, contact us at 760-688-0600. Thornton Koller’s experienced attorneys can discuss your claim with you, ensure that your rights are protected, and advise you on the best course of legal action you should take.