PREDATORY LENDING

A Message from Senator Boxer

Many of us have heard the old phrase, “If it sounds too good to be true, it probably is.” These words of wisdom are especially important if you are buying a house or refinancing your home. Predatory lending practices can threaten your home, your finances, and your future.

According to the Department of Housing and Urban Development (HUD), predatory lending occurs when appraisers, mortgage brokers, or home improvement contractors:

- Sell properties for much more than they are worth using false appraisals.

- Encourage borrowers to lie about their income, expenses, or cash available for down payments in order to get a loan.

- Knowingly lend more money than a borrower can afford to repay.

- Charge high interest rates to borrowers based on their race or national origin and not on their credit history.

- Charge fees for unnecessary or nonexistent products and services.

- Pressure borrowers to accept higher-risk loans such as balloon loans, interest-only payments, and steep pre-payment penalties.

- Target vulnerable borrowers to cash out refinancing offers when they know borrowers are in need of cash due to medical, unemployment, or debt problems.

- "Strip" homeowners' equity from their homes by convincing them to refinance again and again, even when there is no benefit to the borrower.

- Use high-pressure sales tactics to sell home improvements and then finance them at high interest rates.

You can click on any of the links below to find more information from the US Government or to learn some general tips.

Sincerely,

Barbara Boxer
United States Senator