Are You The Victim Of Lending Fraud Or Predatory Lending Practices?

Loan Fraud can take many forms, ranging from verbal misrepresentations about the cost of a loan; to failure to disclose loan terms such as the interest rate, amount financed or closing costs; to elaborate scams involving identity theft, forged documents and “straw buyers.”  Loan fraud and other forms of predatory lending are characterized by exorbitant interest rates, burdensome fees and costs, lack of clarity regarding loan terms, and high pressure sales tactics.

There are a numerous consumer protection laws that protect consumers against lending fraud and other predatory lending practices.  One important consumer protection statute that applies to real estate, auto and other loans, is the Truth in Lending Act (TILA), described below.

The Truth In Lending Act (TILA) Protects Consumers Against Various Predatory Lending Practices Related to the Disclosure of Loan Terms.

Under The Truth in Lending Act (TILA), lenders must:

• Disclose the identity of the lender is, the amount being financed, the annual percentage rate (APR), finance charges, duration of the loan, payment schedule and penalties for late payment or prepayment.
• Disclose certain other information about the terms or the loan you are agreeing to;
• Disclose that information in clear, easy-to-read writing.
• Provide you with a copy of that lending disclosure.
• Provide additional early disclosures regarding adjustable rate mortgages (ARM loans) and certain very high interest loans
• Provide multiple copies of the “Notice of Right to Cancel” in certain types of real estate transactions.

In some cases, the lender violates TILA by adding on hidden fees or misclassifying loan costs in order to make the cost of borrowing seem lower than it really is.  When the Truth in Lending Act (TILA) has been violated, the consumer may be entitled recover damages, costs, and attorney’s fees.  In certain cases, a consumer whose rights have been violated under TILA has the right to rescind (unwind) the loan.

Other Types Of Loan Fraud and Predatory Lending Abuses:

There are, of course, many other types of abuses in addition to the practices barred under the Truth in Lending Act.  Other examples of loan fraud/predatory lending abuse include:

• Bogus insurance charges;
• Warranty fraud;
• False statements regarding your credit score or eligibility for other, more affordable loan products;
• Identity theft;
• False statements by the mortgage broker and/or lender.
• Use of straw buyers

One particulary common type of loan fraud is auto loan fraud.  Although many of the practices noted above are commonly found in the auto financing context, certain types of scams, such as the “Yo-Yo Sale”  are particular to auto financing.  If you are a victim of auto fraud or unfair and deceptive auto dealer practices, including fraud in auto financing, click here for more information.  (hyperlink to auto fraud page).

In the case of credit card disputes (which are covered under a subsection of the Truth in Lending Act (TILA) called the Fair Credit Billing Act or FCBA), lenders must adequately investigate disputed charges and follow a detailed procedure regarding handling of this “debt” during the course of the dispute or until corrected.

If you have been a victim of loan fraud, predatory lending practices, Truth in Lending (TILA) violations or have been otherwise treated in an unfair manner during the lending process, contact the consumer lawyers at Schlanger & Schlanger, LLP at 1-800-685-2500 or by filling out our consumer questionnaire.