What should Arizonans know about predatory lending?

Predatory lenders may target and seek to take advantage of borrowers through the use of unfair, deceptive or fraudulent practices.

The Metro Phoenix area is being forecast to top the U.S. housing market in 2017 by a national real estate website, AZCentral.com reports. As buyers enter the market for a new home, they often work with a mortgage lender. While they may seem to be looking out for people and trying to help they buy a home, some lenders may seek to take advantage of consumers. By having an understanding of predatory lending, people may protect themselves and their investments.

What is predatory lending?

Predatory lending occurs when lenders employ deceptive, unfair or fraudulent practices to entice borrowers to sign loan agreements. These loan contracts are generally not in the consumers' best interests. Further, the lenders often knowingly lend more than what the borrowers can afford to repay.

In general, anyone could potentially fall victim to predatory lending. However, lenders who engage in such practices commonly target those who are not familiar with loans, terms or finances, as well as people who may not qualify for conventional loans. Often, predatory lenders push people to sign loan contracts before they are able to thoroughly review the paperwork. They may lead people to believe they are their only option for obtaining home loan financing or that they cannot get as good of a deal if they do not finance through them.

Common predatory practices

There are a variety of home mortgage lending practices that may be considered predatory lending, including the following:

· Using false appraisals to sell properties for more than they are worth

· Charging high interest rates based on factors other than borrowers' credit history

· Pressuring consumers to accept high-risk loans

· Charging high up-front fees

· Adding fees for nonexistent or unnecessary products and services

Predatory lenders may also ask people to sign contracts that are blank or that contain false information. Additionally, they may effectually take equity away from homeowners by convincing them to refinance for no reason at all or when they are unable to meet the terms of the original loan. It is important for people to keep in mind that, while not all predatory practices are illegal, they may have cause for legal action if they were targeted or otherwise taken advantage of by their mortgage lender.

Seeking legal counsel

The dream of owning a home can be easily dashed for Arizonans when they are targeted by predatory lenders. Not only may they be at risk for losing their home, their credit and ability to secure another home loan may also be affected. Therefore, those who believe they have been taken advantage of by their mortgage lenders may benefit from consulting with a legal representative. A lawyer may help them understand their rights and determine whether the lender might have used predatory practices.