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CHALLENGES TO HOMEOWNERSHIP: Predatory Lending and Other Homeowner Fraud. Housing Forum May 20, 2005. Stephen H. Olden Legal Aid Society of Greater Cincinnati 215 E. Ninth Street, Suite 200 Cincinnati, OH 45202 (513) 241-9400 [email protected] New Buyers.

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challenges to homeownership predatory lending and other homeowner fraud
CHALLENGES TO HOMEOWNERSHIP:Predatory Lending and Other Homeowner Fraud

Housing Forum

May 20, 2005

Stephen H. Olden

Legal Aid Society of Greater Cincinnati

215 E. Ninth Street, Suite 200

Cincinnati, OH 45202

(513) 241-9400

[email protected]

new buyers
New Buyers
  • Predatory home purchase loans
  • Hidden defects in home
  • Sharp loan servicing practices
current owners
Current Owners
  • Predatory refinance loans
  • Shoddy home repairs/remodeling
  • Misunderstood reverse mortgages
outcomes for homeowner
Outcomes for Homeowner
  • Financial struggles/depleted savings
  • Ruined credit
  • Foreclosure/sheriff sale
outcomes for neighborhood
Outcomes for Neighborhood
  • Foreclosures
  • “Investors”/speculators in neighborhood
  • Declining neighborhood
fair housing phenomenon
Fair Housing Phenomenon
  • Prime lenders and redlining
  • Sub-prime lenders and reverse redlining
predatory loans
Predatory Loans
  • Sub-prime lender
  • Appraiser
  • Broker
  • Title company
  • Others?
warning signs
Warning Signs
  • High interest rate
  • High closing fees
  • Balloon payment/adjustable payments
  • Falsified loan application
  • No real benefit to borrower
  • Home repair scam
  • Debt consolidations (often unsecured debt)
targeted victims
Targeted Victims
  • Elderly
  • New, young
  • Minorities
elderly
Elderly
  • High equity in homes
  • Trusting, ripe for con artists
  • View crime as physical and with weapons
new young
New, Young
  • “American Dream” is appealing
  • Lack financial knowledge
minorities
Minorities
  • Lack of access to credit channels
  • Reverse redlining
  • Discriminatory loan terms
home purchases home repairs
Home Purchases/Home Repairs
  • Property flipping and “ugly houses”
  • Investors
  • Fly-by-night contractors
sharp loan servicing practices
Sharp Loan Servicing Practices
  • Junk fees, charges
  • Unaccounted-for payments
  • “Lapsed” insurance
  • Hasty foreclosures
misunderstood reverse mortgages
Misunderstood Reverse Mortgages
  • Complexities
  • Equity depletion
  • Alternatives not explored
what s being done
What’s Being Done?
  • Consumer education/counseling
  • Industry clean-up
  • Law enforcement
  • Legislation
  • Litigation
fountain pen predators
Fountain Pen Predators

Yes, as through this world I’ve wandered

I’ve seen lots of funny men;

Some will rob you with a six-gun,

And some with a fountain pen.

And as through your life you travel,

Yes, as through your life you roam,

You won’t never see an outlaw

Drive a family from their home.

Woody Guthrie

Pretty Boy Floyd (1939)

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