Volume 3 Number 7 February 13, 2006

Predatory Lending Brochure   Predatory Lending Video   Mortgage Brochure

MESSAGE FROM TOM GALLAGHER: BEWARE OF PREDATORY LENDERS In 2002, we worked to combat predatory lending practices with the Florida Fair Lending Act, which prohibits aggressive and deceptive loan tactics including charging prepayment penalties for longer than three years and refinancing a loan during the first 18 months without a benefit to the borrower.  The Act also prevents lenders from increasing interest on loans and charging late fees that exceed five percent of the payment. My office followed up in the spring of 2003 with public education forums around the state with consumer advocacy groups to share the new protections available under the law. Here’s what you should know if you’re purchasing your first home, refinancing your current home, or need a home equity loan, and want to protect yourself from dishonest lenders.     Watch out for excessively high interest rates, hidden fees, loan offers from telemarketers and uninvited home improvement solicitations Never sign a note, mortgage, or other legal document with blank spaces, and get copies of all signed documents upon completion.  Be sure to get the agreement in writing, because verbal promises mean nothing legally. Other things you should consider when applying for a loan are the number and dollar amount of the payments, the length of the loan, and terms such as balloon payment and prepayment penalty, and fixed or adjustable rate.  Shop around with at least three reputable brokers and lenders.  Always ask for a Good Faith Estimate – this will provide you with a reasonable estimate of the closing costs at the time of your application.  You may also want to consider locking in your interest rate at the time of loan application so that your interest rate will not increase while your loan is being processed.  Ask questions about the terms of the loan, and check the contract to confirm that the terms you have discussed are clearly written in the loan documents.  Read the entire mortgage contract carefully, and make sure you fully understand your obligations and all provisions of the contract before signing.  Television or direct mail ads claiming you can qualify for a loan based on your home equity should be carefully researched. The Department of Financial Services has free literature: Loan Repayment Guides and Mortgage Guide brochures, which are available by calling us at 1-800-342-2762.  You can also check out if the company you plan to deal with is registered or if any complaints have been filed against that company.