» Preventing Foreclosure & Predatory Loans
Skyrocketing home foreclosures has emerged as one of the top housing issues in the nation. Northern Cook County experienced the largest growth in properties with foreclosure filings, with an increase of over 67 percent from 2006 to 2007 and more than 154 percent from 2005 to 2007. This tragedy for homeowners and their neighborhoods is expected to deepen as foreclosures grow over the next 2 to 3 years. (See press release from the Woodstock Institute for more information on 2007 foreclosures in the Chicago area).
On July 1, 2008 a new Illinois law (SB 1167) will help protect borrowers from risky loans, fraudulent lending, and the predatory practices of many sub-prime lenders. This law mandates housing counseling for families seeking a mortgage or refinancing who meet certain criteria including blemished credit.
Interfaith Housing Center is currently one of only two HUD certified housing counseling agencies to offer this counseling service in north suburban Cook County. Interfaith’s free and confidential foreclosure prevention services include:
- Educating borrowers about the options available;
- Acting as the liaison between borrower and lender;
- Re-negotiating loans at terms acceptable to both lender and borrower, or making referrals to a new lender;
- Filing a “hardship request” to defer payments for financial or medical reasons; and
- Referring troubled borrowers to legal and financial resources.
To find a counseling agency in a neighborhood outside Chicago’s northern suburbs, click here.
Some foreclosures are the result of predatory lending. Predatory lending is a term used to describe the abusive practices of a lender who pressures or deceives a borrower to take on a debt that is beyond his/her ability to repay.
Bad mortgages aren’t the only kind of predatory loans. Home improvement scams, junk fees and bait-and-switch practices also fleece homeowners of hard-earned money.
Some predatory lending takes the form of subprime loans and adjustable rate mortgages, or ARMs. Lenders who offer these products claim that the increased risk of these borrowers requires them to charge higher interest rates and additional fees.
Subprime lending, when done fairly, may provide a homeowner with damaged credit a second chance. However, such loans are frequently offered by unscrupulous lenders who do not factor in the ability to repay the loan. ARM products start borrowers with two to three years of modest monthly payments, often interest-only, which then reset and adjust rapidly upward leaving many borrowers in serious financial trouble and vulnerable to foreclosure.
Although predatory lenders often prey on older adults, those with poor credit, the less educated, and racial minorities, victims of predatory lending are represented in all walks of life. If you answer “yes” to these questions, you may be in a predatory situation:
- Are you making higher payments on your loan than you expected?
- Did the lender inflate your income during the application process?
- Were you led into a high-interest rate mortgage when you could have qualified for a mortgage with a lower interest rate?
- Have you incorrectly been charged late fees?
- Were you only offered a loan with a pre-payment penalty?
- Did the original terms or conditions of the loan change at closing?
- Have you been harassed by your lender? Or, has your lender stopped being responsive about your questions or concerns after the loan was made?
You Should Know
Predatory lending is illegal in Illinois. You are protected by law against abusive practices.
If a loan to consolidate debt or provide extra cash seems too good to be true, it probably is. Don't sign anything that doesn’t seem right, even if the lender tells you "it's the only way to get the loan through." More tips.
Know that Interfaith can help. Even if you have signed paperwork, you may be able to avoid a predatory loan. Send e-mail or call Jasmine Brewer on our staff (847-501-5768, ext. 404) for help. Our staff will review your case and paperwork, inform you of your options, and offer appropriate help. Our services are free and confidential.
Back to Top
|
