Are You A Victim Of Predatory Lending??

Here Are 7 Signs of Predatory Lending:
source

Predatory mortgage lending involves a wide array of abusive practices. Here are brief descriptions of some of the most common.

• Excessive Fees
• Abusive Prepayment Penalties
• Kickbacks to Brokers (Yield Spread Premiums)
• Loan Flipping
• Unnecessary Products
• Mandatory Arbitration
• Steering & Targeting

Excessive fees

Points and fees are costs not directly reflected in interest rates. Because these costs can be financed, they are easy to disguise or downplay. On competitive loans, fees below 1% of the loan amount are typical. On predatory loans, fees totaling more than 5% of the loan amount are common.

Abusive prepayment penalties

Borrowers with higher-interest subprime loans have a strong incentive to refinance as soon as their credit improves. However, up to 80% of all subprime mortgages carry a prepayment penalty -- a fee for paying off a loan early. An abusive prepayment penalty typically is effective more than three years and/or costs more than six months’ interest. In the prime market, only about 2% of home loans carry prepayment penalties of any length.
>> More about prepayment penalties...

Kickbacks to brokers (yield spread premiums)

When brokers deliver a loan with an inflated interest rate (i.e., higher than the rate acceptable to the lender), the lender often pays a “yield spread premium" -- a kickback for making the loan more costly to the borrower.
>> More about yield spread premiums...

Loan flipping

A lender "flips" a borrower by refinancing a loan to generate fee income without providing any net tangible benefit to the borrower. Flipping can quickly drain borrower equity and increase monthly payments -- sometimes on homes that had previously been owned free of debt.

Unnecessary products

Sometimes borrowers may pay more than necessary because lenders sell and finance unnecessary insurance or other products along with the loan.

Mandatory arbitration

Some loan contracts require "mandatory arbitration," meaning that the borrowers are not allowed to seek legal remedies in a court if they find that their home is threatened by loans with illegal or abusive terms. Mandatory arbitration makes it much less likely that borrowers will receive fair and appropriate remedies in cases of wrongdoing.
>> More about mandatory arbitration...

Steering & Targeting

Predatory lenders may steer borrowers into subprime mortgages, even when the borrowers could qualify for a mainstream loan.Vulnerable borrowers may be subjected to aggressive sales tactics and sometimes outright fraud. Fannie Mae has estimated that up to half of borrowers with subprime mortgages could have qualified for loans with better terms.

According to a government study, over half (51%) of refinance mortgages in predominantly African-American neighborhoods are subprime loans, compared to only 9% of refinances in predominantly white neighborhoods.

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It is disheartening knowing people are taking advantage of the disadvantaged and the unknowing.
But take heart, The Center For Responsible Lending offers wisdom and assistance.
Click here and learn more.


Center for Responsible Lending

cartoon courtesy of Cartoon Stock

The "REAL" cost to own

I bought my house in 2001. I have to admit...that was one of the proudest days in my life. At the time it signified to me that I had accomplished a level of financial attainment that I honestly wasn't sure was going to happen. I knew that it would, but not that early. When your in high school your plan is for the most part is to go to college, get married, buy a house and have kids. Maybe not in that order but hey? The house was my last accomplishment. So we get the house...and head in for the closing. I sign a zillion papers telling me the house is mine. In the car before I headed to my new home, I begin to REALLY read the paperwork. My heart dropped when I realized how much I'm really paying for my 90k house.

Over $200,000 bucks. THATS PIMPING RIGHT THERE!

I had calculated the percentage rate I was given wrong. I was ignorant to what APR really meant. Over the next thirty years I will have paid over 200k for bungalow style home. Don't get wrong. I like my pad. 4 bdrms, finished basement, 2 car garage, nice yard. Plus I got a great deal. Old couple that lived there before was were the only tenants. But 200K?!?

My question is this. I understand that banks should make a nice bit of money to finance your house for you. But shuold they make more than double what you paid for the house? Thats loan sharking. Those of you who own homes...what did you think when you looked at that thick ass packet showing yor payments over the next 15 or 30 years, however long you financed your mortgage?

Finances are so important to understand. I didn't always do that until about 3 years ago when I got into trouble. Now that I've learned to make better decisions and not live for the moment but rather the future, I talk peoples heads off all the time when I see people wasting money. I'm surprised it has taken me this long to start blogging about money. I thank Bria for letting me be apart of the Oxygen blog.

So anyway, I thought I would give other examples of you really are getting hammered when you finance through banks if your credit is not top notch.

These numbers are crunched using a Annual Percentage Rate calculator which you can find anywhere using Google:

Using pre-established numbers:

House

Total Price for House- $115,000 financed at 6.25%

Closing Costs: $3,100
Monthly Payment: $708.07 not including local taxes & Home Owners Insurance
Total Interest Paid after 30 years: $139,910.47

Total Paid for house: $254,910.47


Car
Total Price for Car- $18,000
8% sales tax
lets say you have a $3000 trade in
You put $800 cash down
Finance the car for 48 months
11% Finance Rate

Total Interest you pay on the car- $3,762.75

And I'm sure if most of you look at your car paperwork. You probably have a higher rate than 11%.


Credit Card

$1,300 Balance
19% interest rate

With a $20 minimum payment It would take you almost 9 years to pay this off. A total of 105 payments. You may think that $1,300 is nothing. Well try having 3 or 4 credit cards with balances like that. Hit a bump in the road with your job, or your spouses job. Now your in a bind.


I'm not saying that credit is terrible. But it has to treated responsibly. Unfortunately I found that out late. But I have recovered through evaluating every financial move with caution. I can't blame the banks or the government for my inadequacies regarding managing credit. Although I have my reservations for their tactics, and what the government allows them charge. Basically they are in bed with each other. But it is up to you to educate yourself and your children to keep from going into debt.

Darkbrotha

darkbrotha.com

Need Some Help??

Although this blog hasn't been updated in a while, it's hoped that some strides have been made towards your life change in the area of finances.

Some ideas to keep in mind as taken from

• 
• Take baby steps-Don't do too many things at once. Doing too much at once will cause frustration and discouragement.
• Be Realistic-Set short term goals. Make a decision to stop INCREASING debt. Be realistic about DECREASING it in 6-12 mos.
• Look for Immediate Benefits- be proud that u had the courage to take control of your finances! Think of how happy you;ll be when u don't have to avoid bill collectors phone calls, or when the day comes when you'll meet your commitments! :)
• Visualize the Future- Imagine what u'll do with your extra $$-invest it, vacation, charity etc.
• Chart Your Own Course-Set up your plan and be sure it works. Don't jump from fad to craze...no comparisons (to your friends) will mean no discouragement.
• Believe In Yourself-Look for small things to get excited about...paying off a bill, getting a balance below $1,000 etc. Remember you're human. if you slip up, it's ok. Don't let it keep you from your bigger goal. Shake it off and keep moving.
• Make it EZ-Leave the ATM cards at home, take a walk in the park, go to the Libary.
• Anticipate Your Excuses-Pay attention to your trouble spots. Have accountability people-those who you'll answer to.
  
• Be Patient- Again, set small goes to avoid discouragement, forgive your slip ups, stick with it, and in time success is yours!
• Celebrate Your Success- Allow small celebrations for yourself, say, every 6-12 mos. Do a trip to the beach, pizza and movies at home, potluck dinner w/friends. Ask them to keep supporting you towards your next goal!

-Remember to be happy, and know you'll be helping someone who is in the same boat, YOU ONCE were in!!

The ABCD's of Getting Out of Debt...

According to

there are 4 rules to getting out of debt.
They're known as "the ABCD's of Getting Out of Debt," and they are:

• Pay Attention
• Be Disciplined
• Craft A Plan
• Do It

Let's hit each point
Pay Attention: In a nutshell, face your stuff (debts). Grin and bear it-write down your debts down! Focus on your spending so you don't go backwards into debt again.
****
Be Discipline: Pay more than the minimum on your credit card, pay bills on time, and live within your means (with the budget you'll create).
*****
Craft A Plan: Face the facts. Put a budget together. Create a repayment plan.
Consolidate/move debts to lower interest rates, and STOP INCURRING NEW DEBT!
*****
Do It: Put your plan to work. Make your lists, charts, reports etc that'll tell you if you're on track. Set small goals such as weekly or monthly. If you can't implement your newly hatched plan for a couple of days, or weeks-it's ok. Start where you are, revise the plan and move forward.
Remember-NO PRESSURE.

-Next, we'll discuss budgeting.

BUSY BUSY BUSY!!!

By now, you should've AT LEAST visited the website for your credit report!
:)

Here's an interactive exercise for you from Mvelopes.com It's a Financial Fitness Quiz, that'll determine how fit you are financially.

Don't be scared!
How Financially Fit R U?


Answer the questions honestly...you need a picture of who are you are as a spender! It's ok-you're not being judged, we're in this together!

Happy New Year's To You!!

We're here!
We've crossed over into 2008!
I hope your New Year's Eve was wonderful!
Mine's was.

This week, why don't we discuss goals.
What do you hope to accomplish in the area of finance in 2008?
You can post a comment, or you can privately write down your goals...
JUST BE HONEST WITH YOURSELF.

Also, don't forget to apply for your credit report-it must be done! ;)
(see post dated 12.30.07)

Chill on this awesome day, January 1st, 2008
And tomorrow...we'll get some work done.

It's late and I'm starting to



Happy 2008, to you!

R U Ready?? : )

Hello, from Oxygen Soul!

It's that time of year again...going over our list of resolutions,
promising ourselves once and for all-we're going to make this work!
Great!
Because the clock is ticking and the countdown has begun


HAPPY NEW YEAR'S EVE!

Today is the eve of a new beginning...a new beginning FOR REAL!
Oxygen of the Soul, is a community designed to encourage, and uplift as you forge your way to financial freedom, and we're glad you've decided to become a part of the family.

Everyone here will seek tips, share tips, discuss financial obstacles, success stories etc.

While this forum is for those who are tired of being enslaved to debt, pressure will not be your portion here.
If you overspend, ok, how will you correct the behavior in the future?


Oxygen of The Soul was created by everyday people, for everyday people, with real everyday monetary struggles, concerns and insights, and advice.

This is New Year's Eve...and I want it to be great one for you, but let's get this ugly order of business out of the way:
CREDIT REPORT


I know, heart palpitations & sweaty palms, trust me, I know the feeling :(
But how will we know where we're going, if we don't know where we're standing... or leaning... or crawling... or hopping...or lawd help us-laying as of today?

By answering a couple of multiple choice questions exclusive to you, your FREE credit reports are a click away at Annual Credit Report. You can order your reports from Experian, Equifax & TransUnion at one sitting.
You will have to pay a nominal fee, if you'd like your credit score also.

If you're more comfortable ordering via telephone:

• Call 1-877-322-8228

• You will go through a simple verification process over the phone.

This is going to be a fun, adventurous, challenging, growing time for all of us.
Remember, we're in this together.

STOP quitting, and DON'T STOP trying!

Now go celebrate New Year's!
Tomorrow the "fun" really starts!