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KNOW HOW TO AVOID PREDATORY LENDERS

Education is a key element in preventing predatory lending, which happens when dishonest lenders make illegal loans. When considering whether to buy a home or refinance, the ABA recommends that you:

• Make sure you’re comfortable with the lender. You want someone who will explain loan details until they are clear. Shop around. Get quotes. This is the single largest purchase of your life. Always question something you may not understand, and seek trusted counsel from a banker, financial advisor, tax expert or even a friend who’s been through the process already.
  
  
• Check a lender’s license with your state. Make sure the lender is regulated or licensed by the government and that there are no regulatory actions against the company. Don’t rely on a lender to tell you it is trustworthy. Also, contact the Better Business Bureau and ask if there have been complaints filed against the lender.
  
  
• Take caution when refinancing. According to the Federal Trade Commission, many solicitations to help you refinance are deceptive. An exceptionally low interest rate should always be a red flag.
  
  
• Read between the lines. Slick TV ads, telemarketers or door-to-door salespeople will often offer fast, easy loans for houses, cars and home repair, but not disclose all of the details. Read the fine print to make sure that what you’re told is what you’re getting.
  
  
• Compare all costs. Mortgages include fees and costs in addition to the down payment. Be sure to compare the total cost so that you don’t pay more at the closing. Make sure what you sign is what you agreed to verbally. Don’t sign any contract that does not agree with what the salesperson presented.
  
  
• You have the right to change your mind. You can, for any reason, within three days of signing a home buying contract change your mind and rescind the deal.
  
  
• Take action. If you have been a victim of predatory lending, let others know. Contact the office of consumer affairs of your state attorney general’s office. Also report your experience to a consumer counselor at the Federal Trade Commission at 1-877-FTC-HELP.