Predatory Lending

New Laws Prohibit Predatory Lending

In light of the recent collapse of the financial system and the related mortgage crisis, the federal government and many states have passed new laws and regulations and made changes to existing laws in attempt to crack down on predatory lending. For example, new disclosure requirements under the Home Ownership and Equity Protection Act of 1994 (HOEPA) and the Real Estate Settlement Procedures Act (RESPA) are designed to prevent predatory lending from occurring. In addition, certain loan terms that were once permissible are now prohibited under various predatory lending laws. Unless you are familiar with these laws, you may not know whether your have been the victim of predatory lending. If you are struggling with unmanageable mortgage debt or facing foreclosure, it is important to know what legal recourse you may have under predatory lending laws.

Home Ownership and Equity Protection Act of 1994 (HOEPA)

Does your mortgage:

  • fail to state your APR or, for variable interest loans, the amount of the maximum monthly payment?
  • call for a higher interest rate after default than before default?
  • call for a balloon payment and have a term of less than 5 years (excluding bridge loans of less than one year used by consumers to buy or build a home)?

Did the interest rate on your mortgage:

  • increase more than 2 percentage points in one year or more than 6% over the entire loan period?
  • increase more than 5% on a single family home?

Real Estate Settlement Procedures Act (RESPA)

  • Do you know or have any reason to believe that your mortgage balance, as reflected on your most recent bill, was incorrect or included unauthorized or illegitimate charges?

If you answered yes to any of these questions or suspect that you may have been the victim of unlawful predatory lending, please contact our offices to learn about your rights and remedies under the predatory lending laws: (207) 283-3777.

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