Predatory Lending
Predatory Lending
In communities across America, people are losing their homes and their investments because of predatory lenders, appraisers, mortgage brokers and home improvement contractors who: Sell properties for much more than they are worth using false appraisals. They encourage borrowers to lie about their income, expenses, or cash available for down payments in order to get a loan and knowingly lend more money than a borrower can afford to repay. The problem has continued to get worse to the point where some lenders charge high interest rates to borrowers based on their race or national origin and not on their credit history. They outrageously charge fees for unnecessary or nonexistent products and services and even pressure borrowers to accept higher-risk loans such as balloon loans, and steep pre-payment penalties. Some lenders shamelessly continue to use high pressure sales tactics to sell home improvements and then finance them at high interest rates.
The Real Estate Settlement Procedures Act is a law protecting consumers from abuses during the residential real estate purchase and loan process by requiring lenders to disclose all settlement costs, practices, and relationships. By researching why predatory lending takes place and understanding the root cause, I believe that my company can use the knowledge to gain consumer confidence and hence increase the volume of loans originated. For example, according to The Center for Responsible Lending, predatory mortgage lending costs Americans more than $9.1 billion each year. Research shows that most of the abusive lending practices take place in the sub-prime market. This market is classified by people with weak or blemished credit and who might have had severe financial problems in their past. To illustrate my point, if I knew my competitor was engaged in unethical lending practices, I would use this information to acquire customers in my competitors region by doing things like holding seminars that
In communities across America, people are losing their homes and their investments because of predatory lenders, appraisers, mortgage brokers and home improvement contractors who: Sell properties for much more than they are worth using false appraisals. They encourage borrowers to lie about their income, expenses, or cash available for down payments in order to get a loan and knowingly lend more money than a borrower can afford to repay. The problem has continued to get worse to the point where some lenders charge high interest rates to borrowers based on their race or national origin and not on their credit history. They outrageously charge fees for unnecessary or nonexistent products and services and even pressure borrowers to accept higher-risk loans such as balloon loans, and steep pre-payment penalties. Some lenders shamelessly continue to use high pressure sales tactics to sell home improvements and then finance them at high interest rates.
The Real Estate Settlement Procedures Act is a law protecting consumers from abuses during the residential real estate purchase and loan process by requiring lenders to disclose all settlement costs, practices, and relationships. By researching why predatory lending takes place and understanding the root cause, I believe that my company can use the knowledge to gain consumer confidence and hence increase the volume of loans originated. For example, according to The Center for Responsible Lending, predatory mortgage lending costs Americans more than $9.1 billion each year. Research shows that most of the abusive lending practices take place in the sub-prime market. This market is classified by people with weak or blemished credit and who might have had severe financial problems in their past. To illustrate my point, if I knew my competitor was engaged in unethical lending practices, I would use this information to acquire customers in my competitors region by doing things like holding seminars that
References: Don 't be a victim of loan Fraud (2005). Department of Housing and Urban Development Retrieved August 24, 2005 from: http://www.hud.gov/offices/hsg/sfh/buying/loanfraud.cfm Center for Responsible Lending. (2005). Predatory Mortgage Lending Website. Retrieved August 24, 2005 from: http://www.responsiblelending.org/abuses/index.cfm Richman, J. (June, 2005). We can be heroes for one foreclosure. Scotsman Guide, 12, 96. Koch, R. (1998). The 80/20 Principle. The secret to success by achieving more with less. New York: Random House.