Caution: Home Equity Lending Scams
It’s easy to feel as if you stand alone against the wolves when you face financial difficulties.
Whether the financial crisis is caused by an unexpected event like a medical emergency or job layoff or has grown slowly through poor financial skills, financial difficulties are extremely stressful.
If you’re stressed by financial problems it takes an extra measure of caution to avoid being taken advantage of by unethical lending scams.
One common target of lending scams is home equity loans. People who own their own homes and have built equity often consider borrowing against the equity they have in their home to restructure their debt into affordable payments. Home equity loans can be financially dangerous and should only be used when one thoroughly understands the implications and consequences.
When you agree to a home equity loan, you are actually putting your home ownership at risk. If the lender is unethical the chances are good that you’ll be taken advantage of in the transaction.
The Federal Trade Commission warns that elderly, minorities and those with low incomes or poor credit should be extremely cautious about home equity loans because certain abusive, exploitative lenders target these populations through a variety of unethical, even illegal, practices. You can learn more by reading the “Home Equity Loans: Borrowers Beware!” information on the FTC web site.
The abusive lending practices to avoid include equity stripping, hidden loan terms such as balloon payments, loan flipping, the “Home Improvement” loan, credit insurance packing, mortgage servicing abuses and signing over your deed.
Each of these abusive lending practices is described by the Federal Trade Commission at http://www.ftc.gov/bcp/conline/pubs/homes/eqscams.htm. Read it carefully before seeking a home equity loan!
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