Borrowers Beware

If you agree to a loan that's based on the equity you have in your home, you may be putting your most valuable asset at risk. Abusive lending practices range from equity stripping and loan flipping to hiding loan terms and packing a loan with extra charges. The Federal Trade Commission (FTC) urges you to be aware of these loan practices to avoid losing your home.

Protecting Yourself

You can protect yourself against losing your home to inappropriate lending practices. Here's how:

Don't:
1. Agree to a home equity loan if you don't have enough income to make the monthly payments.

2. Sign any document you haven't read or any document that has blank spaces to be filled in after you sign.

3. Let anyone pressure you into signing any document.

4. Agree to a loan that includes credit insurance or extra products you don't want.

5. Let the promise of extra cash or lower monthly payments get in the way of your good judgment about whether the cost you will pay for the loan is really worth it.

6. Deed your property to anyone. First consult an attorney, a knowledgeable family member, or someone else you trust.

Do:
1. Ask specifically if credit insurance is required as a condition of the loan. If it isn't, and a charge is included in your loan and you don't want the insurance, ask that the charge be removed from the loan documents. If you want the added security of credit insurance, shop around for the best rates.

2. Keep careful records of what you've paid, including billing statements and canceled checks. Challenge any charge you think is inaccurate.

3. Check contractors' references when it is time to have work done in your home. Get more than one estimate.

4. Read all items carefully. If you need an explanation of any terms or conditions, talk to someone you can trust, such as a knowledgeable family member or an attorney. Consider all the costs of financing before you agree to a loan.

For more information visit www.ftc.gov

Remember
Debt Consolidation:
Consolidating your debt through a second mortgage or a home equity line of credit requires you to put up your home as collateral. If you can't make the payments, or if your payments are late, you could lose your home.

Federal Laws
Major laws that govern financial institutions and protect individuals in their financial dealings

Organizations

Fannie Mae
Freddie Mac
Ginnie Mae
Nellie Mae
Sallie Mae

Consumer Info

Credit Bureau
Credit Report
Directory of Federal Agencies
Federal Trade Commission (FTC)
Identity Theft
Predatory Lending
Repair Your Bad Credit
Truth in Lending Act
Borrowers Beware

Miscellaneous

Private Mortgage Insurance (PMI)
Prepayment Penalty

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