General Housing Information Article


Predatory Lending Schemes and Scams

Beware Of Predatory Lending Schemes

Most mortgage lenders are reputable and provide a valuable service by allowing families to own a home without saving the thousands or hundreds of thousands of dollars necessary to buy it outright. However, a few, unscrupulous lenders, especially those who make high risk second mortgages, engage in predatory lending practices that can increase the likelihood that a borrower will lose his or her home to foreclosure. These abusive practices include making a mortgage loan to an individual who does not have the income to repay it, charging excessive interest, points and fees or repeatedly refinancing a loan without providing any real value to the borrower.

Borrowers facing unemployment and/or foreclosure are frequent targets of predatory lenders because they are desperate to find any "solution" to their default.

Homeowners frequently receive refinance offers in the mail telling them that they have been "pre-approved" for credit based on the equity in their home. When you are wondering how you are going to pay your mortgage and other bills, it may appear very attractive to borrow against your house. But consider this, if you cannot make your current payments, increasing your debt, even if you get some temporary cash, will make it harder to keep your home.

Beware of Scams:

  • Equity skimming: a buyer offers to repay the mortgage or sell the property if you sign over the deed and move out.
  • Phony counseling agencies. Some groups calling themselves "counseling agencies" may approach you and offer to perform certain services for a fee. These could well be services you could do for yourself for free, such as negotiating a new payment plan with your lender, or pursuing a pre-foreclosure sale. If you have any doubt about paying for such services, call a HUD-approved housing counseling agency at (800) 569-4287 or TDD (800) 877-8339. Do this before you pay anyone or sign anything. Don't sign any papers you don't fully understand.
  • Make sure you get all "promises" in writing.
  • Beware of any contract of sale of loan assumption where you are not formally released from liability for your mortgage debt.
  • Check with a lawyer or your mortgage company before entering into any deal involving your home.
  • If you're selling the house yourself to avoid foreclosure, check to see if there are any complaints against the prospective buyer. You can contact the Arizona Office of the Attorney General Consumer Fraud Unit for this type of information.
  • Do not sign anything you do not understand. It is your right and duty to ask questions.
  • Information is your best defense against becoming a victim of predatory lending especially for a desperate homeowner! 

Where to Report Suspected Predatory Lending – homeowners can contact the Arizona Office of the Attorney General, or call 1(800) 352-8431 to get information on what steps to take to file a complaint. You may also want to look at Predatory Lending Brochure from the Office of the Attorney General. 

For more information about Predatory Lending go to:

HUD's Predatory Lending Web Site

Attached Document
.pdf Predatory Lending Schemes and Scams


Comments:

QUESTIONS

  • A friend wants to pay to build a large shop/garage behind my house, for us to work on cars. By doing this, can he, in anyway, have legal property rights to owning my land?
  • The apartment that I moved out of says I owe them money for a variety of things when I moved out. They charged me to paint it, but when I moved in the walls were already dirty with spills and stains. I have pictures to prove it when I moved in. Also, when I asked for a copy of what I am being charged for, the information was not accurate. It says they did all the cleaning and painting in the middle of the month, but I didn't move out until the last day of that month. Do I have an argument worth pursuing?
  • What can I do if the landlaord turns off the chiller system for the whole apartment complex and it's over 100 degrees outside
  • I am a new tenant on section 8 housing as a tenant doi have to stay in a apartment that has roaches and I'm constantly complaining. I feel no human being should have to be subject to live like this just because your low income. What can I do please help
  • What can I do when my girlfriend that is on the lease with me has people threaten me to move out at such and such time.
  • My house foreclosed and was sold at auction on 4/4. On 4/5 I spoke with the new owner and he said he would give me until 4/12 to vacate. Today 4/9 I recieved a Forcible Detainer request form in the mail. DO I need to be out by today?
  • Tenant was caught stealing& asked to leave. ROOMATE LEFT THAT NIGHT & HAD HELP AND TOOK ALL BELONGINGS! Now. two wks.later, r-mate is stating things were left behind&bringing law to retrieve them? What do i do?
  • My landlord just have us 2 months notice to move by text message. Can my landlord due that during a time of state emergency?
  • i realize the landlord is responsible for habitable property, do they have to pay for another rental for my family and relocate us due to mold in apt which is not my fault. who pays?
  • I live in an HOA where the board wants to change the CC&Rs to start requiring homeowners to provide deposits for several things, such as bringing in dumpsters. I reviewed Title 33 and the only place where I see they can require a deposit is for remodeling a main house (33-1817.B) in order to make sure the remodel complies with approved plans. ARS Title 33 is clear that the HOA can assess fines and assessments but, other than this one instance, it does not say they can require deposit. Are they allowed to do this?

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