As more and more consumers face foreclosure there are disturbing stories coming to light. It seems that some people are losing their homes after agreeing to a series of refinancing arrangements that were almost sure to lead to eventual eviction.
Though no one purposely agrees to a loan that is unaffordable, many of the loans offered over the last 5 to 10 years had terms that were difficult to understand. Tempted by lower interest rates and payments over a period of time, and needing cash, many consumers simply did not understand or were not told the long run ramifications of the loan terms.
It seems that senior citizens had become targets of lending institutions and were aggressively solicited to accept refinancing arrangements on their homes. The offers appeared to be reasonable on the surface and designed to help the homeowner keep the house, but in fact they did not serve the consumer well at all.
The elderly homeowner was targeted because so many of them own their home after making payments for decades. Because there is a lot of equity in the home, it makes it easy for the lender to make it appear as if the senior citizen is getting needed cash under reasonable and beneficial terms. The types of loans that were offered over the last 10 years included the adjustable rate mortgages and loans where the homeowner could choose a payment amount.
Since a lender does not give anything for free, the loans allowing homeowners to choose a monthly payment that fit their budget led to the balance on the home being increased for the amount they would have paid under a normal financing arrangement. You may believe that senior citizens are responsible for making their own decisions, but predatory lending is lending that fails to reveal all information needed to make a good borrowing decision or uses outright lies. The acts of omission make it impossible to make an informed decision.
No matter what type of mortgage arrangement is established, eventually the debt is going to come due. That is when it gets ugly for many consumers. Balloon payments, payment due notices, eviction notices and more all become part of the nightmare. In some cases it appears loans were made to senior citizens who were unable to make informed decisions due to dementia.
This predatory lending is so disturbing that California has already banned loans called the “Pick a Payment” loan. Making it more difficult to deal with these situations as the payments balloon is the fact many banks have changed hands. Banks that have never offered these types of predatory lending loans must now handle the aftermath. This is giving essentially harmless lending institutions blame for something they are really not responsible for in the first place.
There is expected to be more situations of predatory lending uncovered as foreclosures continue. Unfortunately the flow of foreclosures remains high despite signs of economic recovery. If you suspect you are a victim of predatory lending or have unreasonable mortgage terms that are sure to lead to foreclosure, you can contact your lender first to see if something can be done to correct the situation. Some families have hired attorneys on behalf of their senior citizen family members in danger of eviction. You can also contact your state Senator, Congressman, or Attorney General and ask for assistance.