New Brochure Heightens Consumer Awareness of Predatory Lending

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The Federal Interagency Task Force on Fair Lending has published a new brochure that alerts consumers to potential borrowing pitfalls, including high-cost home loans, and provides tips for getting the best financing deal possible.

The brochure, "Putting Your Home on the Loan Line is Risky Business," warns that regardless of the intended use of a home equity loan - bill consolidation, home repair, or some other purpose - it is important that consumers shop around.

Specifically, the brochure cautions that certain lenders, often called "predatory lenders," target homeowners with low incomes or poor credit histories, including the elderly, by deceiving them about loan terms or giving them loans they cannot afford to repay. Recognizing that many consumers have other options for meeting their financial needs, the brochure recommends comparison shopping for the most favorable interest rates, payments, loan terms, points and fees, and other loan costs; and having loan documents reviewed by a knowledgeable friend, attorney, or housing counselor.

The brochure also reminds consumers that if they are refinancing or using their home as security for a home equity loan, second mortgage, or line of credit, federal law gives them three business days after signing the loan papers to cancel the deal. If the three-day period has already passed and consumers believe they have been misled, the brochure suggests that they contact a state or local bar association, a local consumer protection agency, or a local fair housing or housing counseling agency.

The Task Force that prepared the brochure comprises ten agencies, including HUD, the Federal Reserve Board, and the Department of Justice. For a copy of the brochure call HUD customer service at (800) 767-7468.

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