Settlements For Victims Of Predatory Lending
| Predatory lending practices are fast becoming a threat to the society. Thousands of borrowers are getting trapped and becoming victims of predatory loans. As a result, they are facing the risk of bankruptcy and home foreclosure. |
Sponsored Links :
|
Predatory lending can be defined as an unscrupulous practice of providing loans to customers at unreasonable terms. There are different types of predatory loans used by mortgage lenders. Some of these include cash-out refinance, balloon loans and successive refinancing of 2/28 loans. In most cases, borrowers do not even realize that they are the victims of a predatory loan. Predatory lenders usually target the most vulnerable customers that include the elderly, immigrants and the minorities. Around $9 billion are robbed from homeowners every year in the form of predatory loans.
According to law, predatory lending practices are illegal and unfair. It is the moral responsibility of the states to maintain a fair and viable market where credit is available to borrowers in a responsible manner. All cases related to predatory lending come under the mortgage law. Some important consumer protection laws introduced with the objective of protecting customer against predatory lending include Truth in Lending Act (TILA), Real Estate Settlement Procedures Act (RESPA), Equal Credit Opportunity Act (ECOA), Home Ownership and Equity Protection Act (HOEPA) and Common Law Fraud. It is useful for the customer to have a basic understanding about various predatory lending practices and also get educated about the different types of laws.
All the consumer protection laws have the option of providing settlement to the victims. This settlement can be in the form of compensatory damages, punitive damages up to $10, 000, equitable relief, mandatory attorney fees and other costs.
In one such landmark settlement cases, Ameriquest Mortgage Co, a California-based mortgage lending firm, had agreed to pay $325 million towards federal consumer protection settlement. This amount was distributed among 725,037 customers, who had taken loans from this company between January 1, 1999 and December 31, 2005. Out of these, 14,180 loans were made in Arizona itself and will receive a total of more than $5 million in compensation. Around $30 million will be paid to all the 49 states including the District of Columbia as they had participated in the settlement agreement. This amount will cover the investigation expenses, and costs incurred for consumer education and enforcement.
More Articles :
|
Settlements For Victims Of Predatory Lending