Lenders Who Prey on Senior Homeowners Getting the Squeeze Copley News Service Online (05/13/02) Vol. 30, No. 9 p.12; Woodard, James M.
The Department of Housing and Urban Development, the National Association of Realtors, the Mortgage Bankers Association of America, and other organizations have launched consumer educational campaigns designed to curb predatory lending. A recent $60 million lawsuit by the Federal Trade Commission against an unscrupulous mortgage company may contribute to these efforts as well. The suit was filed by AARP in 1998 following complaints from senior homeowners, many of whom lost their residences due to exorbitant fees. In fact, the firm had charged loan origination fees of 10 percent to 25 percent--while most lenders charge a mere 2 percent. If approved by a California federal court, 18,000 borrowers in 18 states would receive about $2,500 to $3,000 each. Homeowners are urged to avoid lenders that ignore the borrower's poor credit, offer "bargain" loans, require upfront fees or balloon payments, or hurry applicants through the process.