Equal Justice News Release | News Release | Predatory Lending News Release | Letter to Congress
“A good name is more desirable than great riches; to be esteemed is better than silver or gold.” - Proverb 22:1
Thanks & Praises be unto The Lord for the wisdom, knowledge and understanding on legal matter because I received countless feedbacks from folks facing foreclosure and bankruptcy around the United States as follows:
Comments: "I have been inundated with TILA questions. So I went out hunting to see if anyone had already written about it in terms that a lay person might be able to understand. What I found is shown below. I believe it to be generally correct and the citations are good citations of law. See this site for the entire write-up. It should give most lay people an idea on how to handle this and it will be valuable to your lawyer if he/she is not totally familiar with the TILA context at the following link:" http://www.rcxloan.com/Civil_Action_BK_Motion_14.htm. Statement made by Attorney at Law, Neil F. Garfield, M.B.A., J.D.
Download in PDF - Banking Default Letter/Motion for Violation of Truth-In-Lending Act (TILA)
I can be reached for a FREE consultation at (cell) 617-202-8069 or (703) 584-5998,
it's FREE, there is no obligation whatsover...! Sincerely, Pierre R. Augustin, MPA, MBA
Common Abuses: Seven Signs of Predatory Lending
Predatory mortgage lending involves a wide array of abusive practices. Here are brief descriptions of some of the most common.
- Excessive Fees
- Abusive Prepayment Penalties
- Kickbacks to Brokers (Yield Spread Premiums)
- Loan Flipping
- Unnecessary Products
- Mandatory Arbitration
- Steering & Targeting
Excessive fees
Points and fees are costs not directly reflected in interest rates. Because these costs can be financed, they are easy to disguise or downplay. On competitive loans, fees below 1% of the loan amount are typical. On predatory loans, fees totaling more than 5% of the loan amount are common.
Abusive prepayment penalties
Borrowers with higher-interest subprime loans have a strong incentive to refinance as soon as their credit improves. However, up to 80% of all subprime mortgages carry a prepayment penalty -- a fee for paying off a loan early. An abusive prepayment penalty typically is effective more than three years and/or costs more than six months’ interest. In the prime market, only about 2% of home loans carry prepayment penalties of any length.
Kickbacks to brokers (yield spread premiums)
When brokers deliver a loan with an inflated interest rate (i.e., higher than the rate acceptable to the lender), the lender often pays a “yield spread premium" -- a kickback for making the loan more costly to the borrower.
Loan flipping
A lender "flips" a borrower by refinancing a loan to generate fee income without providing any net tangible benefit to the borrower. Flipping can quickly drain borrower equity and increase monthly payments -- sometimes on homes that had previously been owned free of debt.
Unnecessary products
Sometimes borrowers may pay more than necessary because lenders sell and finance unnecessary insurance or other products along with the loan.
Mandatory arbitration
Some loan contracts require "mandatory arbitration," meaning that the borrowers are not allowed to seek legal remedies in a court if they find that their home is threatened by loans with illegal or abusive terms. Mandatory arbitration makes it much less likely that borrowers will receive fair and appropriate remedies in cases of wrongdoing.
Steering & Targeting
Predatory lenders may steer borrowers into subprime mortgages, even when the borrowers could qualify for a mainstream loan.Vulnerable borrowers may be subjected to aggressive sales tactics and sometimes outright fraud. Fannie Mae has estimated that up to half of borrowers with subprime mortgages could have qualified for loans with better terms.
According to a government study, over half (51%) of refinance mortgages in predominantly African-American neighborhoods are subprime loans, compared to only 9% of refinances in predominantly white neighborhoods.
|
