Predatory Lending is prohibited by state and federal laws. Lenders are not allowed to use deception or fraudulent tactics to “guide” a borrower into accepting a loan for their house or other items. As a tool to prevent foreclosure, a real estate attorney may look at your loan to see if it meets the terms of predatory lending.
Signs of a Predatory Loan
If you feel your home loan is predatory in nature, you should take it to a foreclosure attorney and have the look at it.
Here are some potential signs of predatory lending:
- High-interest rates – in some cases they go above the state ceiling on interest rates for Ohio.
- Asset based-loans
- Excessive fees to close or handle the loan
- Loan packing – adding a bunch of non-required products to the loan, such as credit protection.
- Providing false information to you about the loan or the results of issues like a rise in interest rates.
- Providing a lot of loans and then selling the loans to lenders.
Some loans may contain one or more of these examples of predatory lending tactics. Checking with a lawyer who specializes in real estate law and home foreclosure is one way to tell if you are a victim of predatory lending. It is helpful to do just that if you are in any stage of the foreclosure process or if you are finding it hard to pay down your loan even if you are making regular payments.
Red Flag Loans
A loan that is classified as a negative amortization loan is a red flag. Your loan balance should decline when you make a payment. When the loan is negative amortization – the balance continues to grow even though you are making the minimum payments each month.
The monthly loan amount changes without reason. Sometimes payment amounts change based on what the national interest rate does. A variable lending rate may mean that your payment may rise or fall as interest rates change. That type of loan can easily become a negative amortization loan if your payments do not change to match the interest rate.
Keeping your loan balance from growing may mean that you need to pay more each month, even if your lender does not indicate that you must. You can also pay more and apply it to the principal so that the amount of interest drops each month.
What To Do About Loans that Are Predatory in Nature?
If you fear you’re facing foreclosure, you should allow a foreclosure lawyer to look over the loan. If the loan is predatory, they will help you understand your rights under the law, stop any harassment from the lender, and outline the steps you need to take to keep your house.
Please note the following:
In Ohio, the statute of limitations for a predatory lending claim is short. It is one year from the date you sign the loan documents. If it has been longer than one year from the date you signed the loan documents you may not have a predatory lending claim, but there may still be options that the foreclosure attorney can explore with you. The Real Estate Settlement & Procedures Act (RESPA) offers borrowers many protections against lenders who mishandle the servicing of their loans.
Contact Cozmyk Law For More Information on Predatory Lending
Cozmyk Law serves the greater Ohio community with foreclosure and BK services. Reach out to our team to find out your rights and to stop aggressive lenders and foreclosure.