Predator Lending
Statistics show that more older citizens own homes than any other age group in the United States. Most older homeowners have owned their homes for longer than average periods of time, have paid down their original mortgage, and can show a large amount of equity for their efforts.
Equity is the money you would make when you sell your home, after the mortgage and other costs are subtracted. It is this hard-earned equity that attracts lenders to older homeowners. This equity attracts some lenders and persons who are trying to “skim” or “steal” the equity through unfair or illegal loans. This is known as “predatory lending.” Lenders other than neighborhood banks or credit unions often make these predatory loans. The loans can come about when homeowners borrow money and must give a first or second mortgage on their home in order to get that loan. These loans may also come about when homeowners sign home improvement contracts. Predatory loans can make large profits for the lenders.
There is no single way to describe all the types of predatory loans. However, there are a number of signs that can tell you if a loan may be predatory. Here are some of those signs:
- Aggressive or pushy advertising mailed to you about getting a loan or about getting money to pay off your bills;
- A person going door-to-door or calling you about home improvements or a loan arranged by the home improvement contractor;
- A mortgage broker is involved in the loan and this broker gets a large fee or kickback;
- Being encouraged to pay off your mortgage with another mortgage that has a higher interest rate;
- Being pressured to pay off your bills by taking out another mortgage on your home;
- Being encouraged to borrow an amount of money that is more than the value of your home;
- If you are behind in your mortgage and someone calls, writes or comes by telling you he or she can save your home from foreclosure;
- A monthly payment that is more than 25 or 30% of what you get monthly from all your sources of income (e.g. pension, wages, social security).
Not all loans are predatory, but if you see any of the signs mentioned above or if you have any questions about a loan, DO NOT SIGN THE LOAN PAPERS! Take them to an attorney. If you cannot afford an attorney, you may qualify for a free attorney. To find out if you qualify, call Legal Aid of Southeastern Pennsylvania (LASP), Delaware County Division, at 610-874-8421, or call Community Impact Legal Services (CILS) at 610-436-4592. Other agencies that may be able to help you are Delaware County Office of Services for the Aging (COSA) at 610-490-1300 or the Bureau of Consumer Protection at 215-560-2414.
Credit Cards and Credit Card Bills
Senior citizens also need to be careful about offers for credit cards. You may get calls or letters asking you to get a new credit card or switch to another credit card. Be very careful about these offers. While credit cards are easy to get, it is very, very hard to pay off the bill if you only pay the minimum balance each month. Offers to switch from your present credit card to another credit card that has a smaller interest rate can be very tempting, but be careful. In fine print on the BACK of many credit applications, it says that the credit card company can charge a higher interest rate if they think that your credit rating does not qualify you for the lower rate. The company often will not tell you, in advance, that they are going to do this.
If you find that you are having trouble paying your credit card bills, you can contact the Consumer Credit Counseling Service. This is a nonprofit organization that can help you work out arrangements to pay bills if you are having trouble keeping up with them. Their number is 1-800-989-2227.
IDENTITY THEFT
One of the fastest growing crimes in America involves so-called “identity theft.” The most common form of identity theft involves credit card fraud, in which perpetrators use your name or credit history to open a credit card account and then run up thousands of dollars in charges which the credit card company believes you are responsible for; or they can use your information to open back accounts or become employed in your name. The damage to your good name and credit can be difficult and time-consuming to rectify.
There is no foolproof way to avoid becoming a victim of “identity theft;” however exercising all of the precautions mentioned in the articles above can help. Most importantly, DON’T GIVE OUT INFORMATION ABOUT YOURSELF TO ANYONE UNLESS IT IS A PERSON OR COMPANY THAT YOU CONTACTED!! Also, be particularly careful with your credit cards, bank cards, social security card, medical cards and any other papers bearing your personal information or identification or account numbers. Keep receipts and statements in a secure place and destroy or shred them when no longer needed. Pay attention to billing cycles and contact a creditor whose bill does not arrive on time. Check all bills before paying and question any items you don’t recognize. Check your credit rating annually with each of the major credit reporting agencies. (See listing below.) Don’t give your bank account numbers to anyone, unless you initiated the transaction. Guard your mail, and place all outgoing mail in a post office collection box.
If an identification card or credit card is lost or stolen, notify the creditor(s) immediately and call the three major credit bureaus to ask that a fraud alert be placed in your file. The credit bureaus and their numbers are: Equifax (1-800-685-1111), Experian (1-888-397-3742) and TransUnion (1-800-916-8800).
If you believe you are the victim of this sort of crime, in addition to contacting your credit card companies and the credit bureaus, as above, you should contact your local or State police, make a report and get a copy of the report to use in opening new accounts. Contact your bank as well and close any accounts that may have been tampered with. If you need a new social security card or help correcting your earnings record, contact the Social Security Administration. Finally, register a complaint with the Federal Trade Commission on their Identity Theft Hotline, 1-877-IDTHEFT (438-4338); TDD #1-866-653-4261. More information is available on the FTC’s website at www.ftc.gov.