HUD No. 03-103
October 6, 2003
HUD INTRODUCES PREDATORY LENDING BROCHURE TO HELP CONSUMERS AVOID LOAN FRAUD
WASHINGTON - Department of Housing and Urban Development today unveiled a new brochure Don't Be a Victim of Loan Fraud - Protect Yourself from Predatory Lenders, that educates consumers on how to avoid becoming victims of predatory lending.
Each year thousands of elderly and minority and low-income homeowners are the main targets for predatory lenders. Many of these homeowners are on limited or fixed incomes, and are asset-rich but cash-poor. Unscrupulous lenders use an array of practices to strip the equity from the borrower's homes. HUD's easy-to-read pamphlet describes nine different types of predatory lending, offers 11 tips on being a smart consumer and describes seven tactics commonly used by predatory lenders.
"This Administration is committed to doing everything possible to protect homebuyers from unscrupulous predatory lending practices," said HUD Assistant Secretary for Housing/Federal Housing Commissioner John C. Weicher. "The information contained in this brochure is a must read for current homeowners who are considering refinancing, or first-time homebuyers before they sign the dotted lines."
The brochure, prepared by HUD's Office of Housing, is geared to all homebuyers, not just those with FHA insured mortgages.
The consumer booklet contains such tips as:
- Do not let anyone convince you to borrow more money than you know you can afford to repay.
- Do not let anyone persuade you to make a false statement on your loan application, such as overstating your income, the source of your downpayment, failing to disclose the nature and amount of your debts, or even how long you have been employed.
- Shop for a lender and compare costs. Be suspicious if anyone tries to steer you to just one lender.
- Hire a properly qualified and licensed home inspector to carefully inspect the property before you are obligated to buy.
- Never sign a blank document or document containing blanks.
- Interview several real estate professionals (agents), and ask for and check references before you select one to help you buy or sell a home.
The brochure also highlights the role of the more than 1,400 HUD-approved housing counseling agencies as a key information resource for prospective and current homeowners. Contacting these agencies is one of the first steps in dealing with potential predatory lending practices. These housing counselors can be located by calling the toll free number 1-800-569-4287.
Don't Be a Victim of Loan Fraud - Protect Yourself from Predatory Lenders will be available for downloading from the HUD web site at or can be obtained by calling the toll free number 1 (800) 767-7468, HUD's Direct Distribution Center. The brochure will be translated into Spanish in the near future.
HUD is the nation's housing agency committed to increasing homeownership, particularly among minorities, creating affordable housing opportunities for low-income Americans, supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development as well as enforces the nation's fair housing laws. More information about HUD and its programs is available on the Internet.