Loan Fraud

Much of loan fraud has occurred in connection with home remodeling and repairs.  Lenders have funded high profit loans from home owners, particularly seniors, who have unknowingly paid above-market interest rates and fees.  The lender typically defends itself by relying on fine print and standard (boilerplate) provisions in loan agreements that attempt to absolve the lender from any responsibility for the promises that were made to induce the borrower to sign. 

For example, the advertising sent to the homeowner and the telephone call during the dinner hour may have said that the home owner had been "specially selected" for a below market loan.  The "friendly" salesperson may say that the loan has no points or hidden costs.  However, the fine print of the loan agreement has numerous fees and costs.  The lender is often a separate legal entity from the marketing company and relies on its lawyers to enforce the boilerplate in its contract. 

Seniors are particularly vulnerable to this type of fraud.  Fortunately the Federal Trade Commission, other federal agencies, as well as private class action attorneys are tackling the problem. One high profile case was filed against the largest subprime interest rate lender in the United States: Associates First Capital Corporation and its successors, Citigroup Inc. and CitiFinancial Credit Company.  The loan portfolio of Associates was immense, almost $30 billion.  The FTC charged the lender with several deceptive practices including representing that debt consolidation could lower monthly payments, packing credit insurance unknown to the borrower in the loan, and unfair debt collection practices.  In addition the FTC charge the company with several violations of federal credit statutes. For more information about cases like this see the FTC web site at www.ftc.gov.

Remedies for consumers may be available under federal statutes like The Truth in Lending Act (TILA), Home Ownership and Equity Protection Act (HOEPA), and the Real Estate Settlement Procedures Act (RESPA).  Most state have consumer protection laws that provide remedies and some have specific provisions targeting loan fraud.

	Description
	Loan Check List
	Prime Rate Fraud (link to Crimes of Persuasion
	Predatory Lending 4/22/02
	Lender Fraud & Remedies 4/02
	Should I sue? Collectability of judgments
	Ponzi and Loan Fraud