Unfortunately, when it comes to fleecing the general public, predatory lenders have developed sophisticated techniques to lure their victims in. The law firm of McFarlin LLP has seen more than our fair share of these types of schemes throughout Southern California. If you have reason to believe either you or a loved one has been caught in a predatory loan, give the office of McFarlin LLP a call at (888) 728-0044 for a free consultation.
What is Predatory Lending?
Like it sounds, predatory lending is the unscrupulous behavior in which less than reputable agents entice individuals to accept loans that they will never be able to pay back. Quite often, these thieves will target individuals they perceive to be ill-informed, of a lower-income bracket and desperate for help. Once convinced of the agent’s legitimacy, which unfortunately can be established in a variety of underhanded ways, and having signed off on the ridiculous terms put down in the loan, victims are now on the hook for payments that are well outside their earning potential.
Predatory lending, much like loan sharking, is built on the idea of taking as much of an individual’s income up until and through the point of complete bankruptcy. Unlike loan sharks, the predatory lenders have a sliver of legal room to stand in – which is why victims of predatory lending seek legal counsel to alleviate the situation.
Is Predatory Lending Illegal in California?
Absolutely. However, you would be surprised by the number of people that fail to recognize the signs or even decide to pursue legal action. There are a multitude of rules and regulations that protect victims of predatory lending, such as The Home Ownership, the Equity Protection Act and the Truth in Lending Act. Failing those, the California Financial Coda §4970 specifically forbids any lender to distribute loans that they are fully aware will never be paid back.
How Do I Know if I am Involved in a Predatory Loan?
This entirely depends on your particular circumstance and the terms you agreed to. However, there are a number of common warning signs that could indicate your loan company is attempting to gouge you without consideration. Some examples of such warning signs include:
- Over the top closing costs and interest rates
- Documentation is incomplete at best or missing at worst
- Pressure – quite often the most common complaint we hear is brokers or lenders looking to seal the deal quickly.
- Cutting you off – predatory lenders often suggest you’ll never get a better deal and they are your last hope
- Final contract is entirely different than what was previously discussed
- Loan flipping – constantly refinancing your loan
- Offering you a loan that is well outside your income potential
- Never investigates your earning potential
- Charging absurd fees and pay off rates
- Breaking verbal agreements throughout the process
- Allowing you to “bend the truth” on any part of your loan application
What Other Types of Predatory Lending Exist?
Refinancing agencies, second mortgage companies and foreclosure experts have made a name for themselves over the past decade or more. These companies are no different from standard predatory lenders, as they prey upon those who are in need of help and have little resources to accomplish their goals. Beware of those claiming to have the “quick fix” – if it seems too good to be true, it probably is.
Will I Lose My House if I Cannot Pay The Loan?
Sadly, predatory companies often are banking on that fact. So, the short answer is yes. However, if you act fast and retain knowledgeable legal counsel you may be able to file suit and preserve your home. At McFarlin LLP, we have extensive experience dealing with outrageous loan terms and the unrelenting lenders that provide them. We will utilize every resource at our disposal to help you keep your home and end the financial exploitation you are experiencing.