There is a vampire loose in the suburbs of America, sneaking up on hardworking families while their children and pets play in their yards. This vampire often attacks the family where they feel the safest; relaxing at home, at a PTA meeting or even during children's sporting events.
At first, the family is enjoying the good life, normal and content. A new car parked in the driveway, a new deck graces the house or maybe a pool has just been installed in the backyard. Dad and Mom know they work hard and deserve these extras. The vampire told them so. The friendly vampire painted an alluring picture of everything they wanted but felt unable to afford. The vampire explained their home is laden with untapped gold, in the form of equity that is theirs to be used.
This vampire is no stranger knocking at the door. He or she is usually an innocuous friendly neighbor, a Little League coach, or some golf buddy. The vampire hangs out, plays with the kids and might even go shopping with Mom. First this bloodsucker gains their trust, spending a great deal of time chatting about their perceived financial problems. This creature actually slyly sizes them up, encourages spending more time enjoying the good life. The family may be told they deserve to have more fun while they are still young enough to enjoy it. This clever vampire even implies life is passing them by while they work themselves to death.
In the family's defense, there is nothing is quite as persuasive as a trusted friend who says what you would love to believe. This particular breed of vampire is quite often skilled at helping his victim family solve all their problems with loving concern.
Have you been the victim of a vampire? Do you know of others?
Here is a tell-tale sign ~ the vampire will call himself or herself an investor, works in real estate, or might be a loan "counselor."
This cunning predator plays on their weaknesses, while the family is certain the vampire is their good friend who cares so much about their happiness and well being. Does their home need repairs or remodeling? Has the family been dreaming of starting their own business? Has Mom been secretly yearning for a tummy tuck? Will that snazzy new car get Dad more clients? Do they like to gamble? Sometimes the vampire may actually go out with them to increase their spending. The vampire will first suggest, then convince the family that a loan is the perfect way to tap into the gold mine of their equity.
No one wants to insult a good friend by having a 3rd party check the loan documents the vampire presents to the family as their means to the good things they deserve. After all, this friend only has their best interest at heart, right? The vampire's loan will probably be unexpectedly delayed a few times, after the family has already started spending the anticipated and "guaranteed" money.
Several weeks into the transaction the unfortunate family is all too often told "Sorry, we had to resubmit your loan to a new lender. Your earlier loan somehow fell through or collapsed due to some kind of error." The next step will come when the family is informed the loan rate has gone up and terms are not as favorable. "Never mind! Don't be too concerned," the vampire will reassure the family to take an adjustable loan for the time being. He promises them, "We'll be able to refi within a year with no problem!"
He also claims he will help them get their FICO scores back up. By now the unfortunate victims probably spend more time talking to the vampire and worrying about their loan than working at their jobs. The vampire cheers them up. He keeps reassuring that the loan will be refinanced long before it climbs. Often final loan documents are signed near the end of the day, without being closely looked over, because "After all, they need to be recorded now before the weekend" so that urgently needed check arrives on Monday.
The artificially induced financial pressure and desperation were cleverly created as part of the loan vampire's gameplan.
The sad facts are that here in one of the world's wealthiest countries profoundly disturbing tales of woe and greed are now revealed to occur at an alarming rate.
No matter how horrendously the agent and his broker have violated their fiduciary duty to consumers, banks and lenders involved cannot simply forgive these ill-advised adjustable loans without risking the very stability of their institutions.
Some homeowners will have to pay off this debt for decades, others will be forced into bankruptcy. Many millions of families (yes, millions) will actually face imminent loss of their homes. No matter from what prospective we look at this situation, the outcome is grim. In this writer's opinion, the devastating fate of these families is only a symptom of a profound social problem. The root disease lies in a society that endorses self-serving greed and reckless disregard for the well being of others as enlightened self-interest.
Research shows that the vast majority of sub prime loans are for refinances, rather than purchases and a significant number of predatory practices are linked to refinances. Sub prime loans are usually not the traditional refinance in which homeowners seek to lower their interest rate or lock-in at a fixed rate. Sub prime refinances are most often promoted in order to provide money for home improvements or other household or personal needs.
There are circumstances where refinancing to use some of the equity in one's home makes sense for the borrower, but cash-out refinances are rife with potential for abuse by predatory lenders, and too often homeowners with significant amounts of equity are convinced to refinance under conditions that are not in their best interest. In some cases, homeowners are sold refinance loans which produce just a few thousand dollars in cash-out, but which refinance their existing mortgages at higher rates and with high fees. In other cases, homeowners roll debt that is not secured by their house, such as credit cards or car loans, into a mortgage which is secured by their house. This may provide the homeowner with a short-term reduction in total monthly obligations, although often it does not even accomplish this because of the high interest rates and fees. In addition, cash-out refinances increase the amount of debt tied to the borrower's house, as well as frequently extending the length of the loan and the total amount of payments. And now if a family is unable to make the payment they will lose their house.
Predatory lenders use refinancing as an opportunity to strip homeowners of their equity by financing thousands of dollars in unnecessary fees and costly credit insurance in the loan. They then add insult to injury by including harmful prepayment penalties in these high-interest refinance loans. More than two-thirds of sub prime loans have prepayment penalties, compared to less than 2% of conventional prime loans. It is not uncommon for sub prime lenders to make loans at 12%-14% interest rates with prepayment penalties lasting from three to five years that require the borrower to pay six months interest on the loan as a penalty for refinancing with another lender to get a lower interest rate. On a $100,000 loan at 11% interest, such a penalty would cost a borrower over $5,000.
Approximately 2.2 million homeowners borrowed against their homes between 1998 and 2006 and most have a sub prime mortgage.
Many of these borrowers now face the loss of their homes to foreclosure. Earlier this year, 80% of sub prime home loans, which had fixed rates initially, became adjustable. That is the interest rates jumped higher on either the 25th month or the 37th month. This jump in the monthly payment caused "payment shock" for the affected homeowners. Many times the loan payments increased by as much as 40%. Unable to make these new higher payments, these unfortunate homeowners soon faced foreclosure.
By Catherine Bryan Ibarra
Protect yourself from predatory lenders: For information about loan fraud and advice about preventing it, see Don't Be A Victim of Loan Fraud.
Local information on predatory lending: Here are some Local Resources by state, that can help you avoid being a victim of predatory lending.
For FHA loans: For problems relating to origination, underwriting, or appraisals contact the FHA Resource Center at (800) 225-5342 (800-CALLFHA).
Avoiding foreclosure on an FHA loan: Visit the HUD National Servicing Center web page or contact them toll-free at (888) 297-8685.
Non-FHA mortgage loans: For complaints concerning practices which include disclosure of interest rates and finance charges (APR), prepayment penalties, credit life insurance, fraud, deception, etc. contact the appropriate agency from this list to complain about the mortgage lender or mortgage broker.
Lender threatening to foreclose or mortgage in default: HUD funds housing counseling agencies throughout the country. To find a
housing counseling agency near you, call toll-free (800) 569-4287 immediately for free guidance or visit the web page.
Settlement Procedures: (FHA and non-FHA mortgages). Visit the RESPA web page for information on RESPA disclosure requirements such as the Good Faith Estimate, HUD-1 and escrow account statements, and how to file a complaint with your lender concerning the servicing of your loan.
If you are still unsure who can best help you, please let HUD Know let us know. (http://www.hud.gov/offices/hsg/sfh/pred/predlend.cfm)
File a housing discrimination complaint: Discrimination in mortgage lending is prohibited by the federal Fair Housing Act and HUD's Office of Fair Housing and Equal Opportunity actively enforces those provisions of the law. Learn how the Fair Housing Act can help you fight predatory lending.
When homeowners or borrowers suspect they may be a victim of a Con-Artist’s work, they have many legal resources available to help them. Potential victims need to report mortgage fraud, mortgage scams, or predatory lending practices as soon as there is an indication these might exist. Waiting to make sure can be costly. Both on the national level and on the state level, government and private organizations are available to answer questions and provide help.
A quick ‘rule-of-thumb’ on who to contact:
If you suspect you are a victim of mortgage fraud, contact the local FBI office; if you suspect or need to report predatory lending practices or other abusive-types of lending, contact your state Attorney General’s office; if you suspect or need to report mortgage scams by a real estate broker or appraiser, contact the state’s real estate licensing board or appraisal licensing board.
HOME CLINIC ( Home Owners Mobile Education)
The Home Clinic is a project provided by Housing Opportunities Collaborative (HOC), a coalition of nonprofit organizations and agencies in the San Diego region.
Distressed homeowners meet with local attorneys who have real estate, lending and mortgage industry experience will give services. Staff members of local HUD approved housing counseling and credit counseling agencies will also be available. The homeowners will get personal review of their mortgage/lending/escrow documents and will be referred to local HUD approved housing counseling agencies or to local law enforcement or to local attorneys for resolution. The attorneys are affiliated with the local Legal Aid Society pro bono program and with the members of the Ethnic Relations Diversity Committee of the San Diego County Bar Association.
The Home Clinic is a portal which enables the distressed homeowner access to existing resources and services. HOC’s Home Clinic pools attorneys, real estate and mortgage industry professionals, housing counseling agencies, fair housing agencies, and other public agencies into one location to give a one-stop shop of counseling resources. It aims to connect distressed homeowners to immediate legal assistance.
Feb. 14-15, 2008: FAIR HOUSING LAWS & LITIGATION CONFERENCE by FHCSD
Attend a complete fair housing training curriculum with special track on Fair Lending--Foreclosures, sponsored by Fair Housing Council of San Diego, San Diego Concourse 202 C Street, SD 92101. Visit www.fhcsd.com or contact Mary Scott Knoll 619-699-5888.
Government Help Preventing Foreclosure;
If your adjustable rate has pushed your mortgage payment to unaffordable levels, you may have some relief. In response to the crisis of people facing default on their home mortgages because their adjustable rate mortgages are no longer affordable, the Federal Housing Administration is coming out with the FHA Secure Refinance Program.(for more details; go to Foreclosure Help, at Communiversity Magazine)
ACORN is providing homeowners with information regarding the foreclosure process and timeline, possible options to prevent foreclosure, how to avoid foreclosure rescue scams and available resources to help them. ACORN has established a toll-free national hotline, 866-67-ACORN to take calls from homeowners facing foreclosure or suffering from predatory loans.
National Resources for Reporting Mortgage Fraud and Scams
The Federal Bureau of Investigation (FBI)
(202) 324-3000 – National FBI Financial Institution Fraud Unit
The FBI, a branch of the United States Department of Justice, is authorized to investigate and enforce criminal laws of the U.S. The FBI investigates criminal acts involving potential violations of the United States Federal Criminal Code. State authorities investigate criminal acts which are violations of their state’s criminal laws.
In conjunction with the ‘White Collar Crime’ department, the FBI investigates mortgage fraud, which often involves many professionals working in collusion: bank loan officers, realtors, appraisers, accountants, and mortgage brokers. All of these profit through various commissions, fictitious sales and fees – often on loans that aren’t genuine.
To report mortgage fraud with the FBI, contact the Field Division listed under each state.
The Federal Trade Commission (FTC)
http://www.ftc.gov/ and www.consumer.gov/idtheft and
To file complaint
Consumer Response Center
600 Pennsylvania Avenue, N.W.
Washington DC 20580
Toll Free Phone: (877) 438-4338 – Identity Theft Clearinghouse
Consumer Response Center: (877) 382-4357
While the Federal Trade Commission does not actually resolve an individual consumer’s problem, it does investigate mortgage fraud with the aim of leading to law enforcement action. The FTC is especially active regarding homeowner and mortgage ‘identity theft.’
In addition to reporting mortgage fraud and scams to other appropriate agencies, filing with the FTC helps put the Con-Artists out of business.
To report fraud or register a complaint about a national bank, contact
Office of the Comptroller of the Currency (OCC)
Comptroller of the Currency
Midwestern District Office
2345 Grand Avenue, Suite 700
Kansas City, MO, 64108-2683
Phone: (800) 613-6743
The OCC charters, regulates and supervises over 2,500 national banks.
Federal Savings and Loan Associations
To report fraud or register a complaint about a federal savings and loan association, contact
Office of Thrift Supervision (OTS)
1700 G Street NW
Washington, D.C. 20552
Phone: (202) 906-6000
Phone: (800) 842-6929 – for consumer complaints
The Office of Thrift Supervision (OTS), a bureau of the U.S. Department of the Treasury, regulates all federally chartered and some state-chartered thrift institutions. This includes savings and loan associations and savings banks. The OTS has regional offices in all states, divided into four regions. To report mortgage fraud or mortgage scams that pertain to a savings & loan association or savings bank, see the contact information listed under each state.
Federal and State Chartered Credit Unions
National Credit Union Association (NCUA)
4807 Spicewood Springs Road, Suite 5200
Austin, TX 78759-8490
Phone: (512) 349-4500
The NCUA can handle complaints concerning a federally chartered credit union and all credit unions chartered in Delaware, South Dakota, Wyoming or Washington, DC. Complaints are handled by one of the five Regional Offices located in Albany, NY: Tempe, AZ” Alexandria, VA: Austin, TX; and Atlanta, GA. To report mortgage fraud or mortgage scams that pertain to a federal credit union, see the contact information listed under each state.
State Chartered Credit Unions
Each state supervises the Credit Unions that it charters, except for Delaware, South Dakota, Wyoming or Washington, DC. To report mortgage fraud or mortgage scams that pertain to a state credit union, see the contact information listed under each state.
The National Association of Attorneys General
750 First Street, NE, Suite 1100
Washington, DC 20002
Phone: (202) 326-6000
Fax: (202) 408-7014
The role of the Attorney General in each state is to protect and serve the citizens. The office of the Attorney General provides legal representation for the State and its various agencies, in behalf of the public interest. However, the Attorney General’s Office may not perform legal advice for consumers or represent them. These offices do want you to report mortgage fraud, predatory lending practices, and mortgage scams to them. Almost all Attorney General Offices provide consumer complaint forms on their web sites to make reporting mortgage scams and fraud easier. These offices are seriously dedicated to assisting the citizens of the state. The National Attorneys General Office consolidates the individual state’s actions against predatory mortgage lending practices.
The Office for Victims of Crime (OVC)
The Office for Victims of Crime (OVC) publishes literature on various victim situations, such as identity theft. An “Attorney General Guidelines for Victim and Witness Assistance” can be obtained online, along with information on federal grant programs to obtain financial assistance if you are a crime victim. (http://www.ojp.gov/ovc/publications/welcome.html#m)
The Better Business Bureau (BBB)
The Council of Better Business Bureaus
4200 Wilson Blvd, Suite 800
Arlington, VA 22203-1838
The Better Business Bureau (BBB), a system of over 120 independent, local Better Business Bureaus, aims at resolving complaints and keeping the public informed. For best results it is best to contact your local Better Business Bureau, rather than the National Office. However, the National Office is still available to help you. Local contacts can be found listed under the state.
Federal Reserve Board of Governors of the Federal Reserve System
20th Street and Constitution Avenue NW
Washington, DC 20551
National Consumers League (NCL)
1701 K Street, NW, Suite 1200
Washington DC 20006.
Phone: (202) 835-3323
Fax: (202) 835-0747
National Fraud Information Center
The National Fraud Information Center is a project of the National Consumers League. It focuses mainly on fraud against the <em>elderly</em>, and internet and telemarketing fraud – all sources of mortgage fraud and mortgage scams.
Center for Responsible Lending
302 West Main Street
Durham, NC 27701
Phone: (919) 313-8500
Fax: (919) 313-8595
910 – 17th Street NW, Suite 500
Washington, DC 20006
Phone: (202) 349-1850
Fax: (202) 289-9009
Predatory Lending & Victim Referral Services:
Phone: (919) 313-8523
Mortgage Bankers Association
Phone: (800) 348-3931 to report abuse
1919 Pennsylvania Avenue, NW
Washington, DC 20006-3438
Phone: (202) 557-2700
National Association of Mortgage Brokers
8201 Greensboro Drive, Ste. 300
McLean, VA 22102
Phone: (703) 610-9009
Fax: (703) 610-9005
Contact them to report suspicious activity of a Mortgage Broker
National Association of Realtors
430 North Michigan Avenue,
Chicago, IL. 60611-4087
500 New Jersey Avenue, NW,
Washington, DC 20001-2020
Phone: (800) 874-6500
Contact them to report suspicious activity of a Realtor.
U.S. Dept. of Housing and Urban Development (HUD)
Office of Consumer and Regulatory Affairs
Director, Interstate land Sales/RESPA Division
451 7th Street S.W.
Washington, DC 20410
Phone: (202) 708-4560
National Hotline: (800) 347-3735
The National Fair Housing Alliance (NFHA)
1212 New York Avenue, NW Ste 525
Washington, DC 2005
Phone: (202) 898-1661
Fax: (202) 371-9744
The NFHA, a consortium consisting of over 120 private, non-profit fair housing organizations, and state/local civil rights groups, helps provide equal access to mortgage loans. The NFHA welcomes phone calls on “how to avoid predatory lenders.”
Their #1 rule is to keep in mind that “Two against one can be quite intimidating when someone is being pressured into signing a loan. Make sure you always have someone else with you who is knowledgeable about financing.”
When using an arbitration service, one can also have an attorney represent them.
The major arbitration administrators that consumers utilize are:
National Arbitration Forum
In North America: (800) 474-2371
Phone: (952) 516-6400
Fax: (952) 345-1160
Toll-free fax: (866) 743-4517
American Arbitration Association (ADR)
The ADR also has regional offices in many states.
335 Madison Avenue, Floor 10
New York, New York 10017-4605
Phone: (212) 716-5800
Fax: (212) 716-5905
Customer Service: (800) 778-7879
This company has offices and mediators throughout the United States.
Major Credit Bureaus
For Fraud Alerts:
P.O. Box 740241
Atlanta, GA 30374-0241
Phone: (800) 525-6285
For Fraud Alerts:
P.O. Box 9530
Allen TX 75013
Phone: (888) 397-3742
For Fraud Alerts:
Fraud Victim Assistance Division,
P.O. Box 6790,
Fullerton, CA 92634
TDD: (877) 553-7803
ACORN – Association of Community Organizations for Reform Now
After reporting mortgage fraud, scams and predatory lending practices to the appropriate agencies, you can also notify ACORN about your situation. Your state ACORN contact can be located at: http://www.acorn.org/index.php?id=2593
Consumer Federation of America (CFA)
Note About This Information
This portion of our website has been created for information purposes only. It is our belief that all information presented here is accurate as of date of publication, however this information may change at any time. The information presented here should be considered a starting point and we encourage everyone to fully research any information you are seeking.