Predatory Lending

Page 4

How To Avoid Predatory Lending:

1. Be wary of loans offered through door-to-door sales or telemarketing solicitations.

2. Be wary of lenders or brokers who guarantee loan approval regardless of your credit history or rating.

3. Shop around. Interest rates and fees vary widely. Don't assume you will not qualify for a loan from a traditional lender. Those loans are less expensive than "sub prime" loans.

4. Be suspicious of anyone who pressures you to act before you are ready.

5. Read the entire loan application carefully before signing. Make sure there are no blank spaces.

6. Make sure that you have received, read and understood all required disclosure documents before you close. At closing, make sure the loan terms have not changed from what you were told before and that there are no additional fees you did not know about.

7. Ask about fees and "points" before applying for a loan. The interest rate is not the only important term of a loan.

8. If you are considering a loan with a variable interest rate, make sure you understand what conditions will affect a change in your rate, and the amount by which your rate may fluctuate.

9. Watch out for "hidden" terms, such as prepayment penalties and balloon payments.

10. Make sure you can really afford the monthly payments. As a general rule, responsible lenders look for mortgage payments to total no more than 29 percent of your total gross income.

This information provided as a public service by Washington State Attorney General's Office at:
www.atg.wa.gov/householdfinance/tips.shtml

Page 1 What is Predatory Lending?
Page 2 What Tactics Do Predators Use?
Page 3 Tips On Being A Smart Consumer

For your peace of mind, read The Truth in Lending Act

References:
www.hud.gov/offices/hsg/sfh/buying/loanfraud.cfm
U.S. Department of Housing and Urban Development
451 7th Street S.W., Washington, DC 20410
Telephone: (202) 708-1112 TTY: (202) 708-1455

SCAMS & FRAUD
Some Scams, Fraud, and Consumer Abuse Items in the News

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