{"id":6106,"date":"2024-11-08T08:19:35","date_gmt":"2024-11-08T13:19:35","guid":{"rendered":"https:\/\/www.deeds.com\/articles\/?p=6106"},"modified":"2024-11-08T08:20:59","modified_gmt":"2024-11-08T13:20:59","slug":"feds-target-predatory-lenders-call-out-nightmare-scenarios-for-deed-seekers","status":"publish","type":"post","link":"https:\/\/www.deeds.com\/articles\/feds-target-predatory-lenders-call-out-nightmare-scenarios-for-deed-seekers\/","title":{"rendered":"Feds Target Predatory Lenders, Call Out \u201cNightmare\u201d Scenarios for Deed Seekers"},"content":{"rendered":"\n
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The U.S. Consumer Financial Protection Bureau<\/a> (CFPB) is acting to block predatory financing, redlining, and zombie mortgages. What\u2019s all this about predators, red lines and zombies, you ask? Let\u2019s break it down.<\/p>\n\n\n\n\n\n\n\n

Predatory Financing: Contracts for Deed<\/h2>\n\n\n\n

A contract for deed is a seller-financed home sale that leads to default more than mainstream mortgage loans do. The CFPB says sellers often deliberately set borrowers up for failure.<\/p>\n\n\n\n

Predatory sellers use contracts to target low-income borrowers, and members of faith-based communities that forbid paying or charging interest (so a lot of these borrowers feel they have no other choice). The sellers keeps the deed until the borrower finishes repaying the loan in full. Investor groups have left buyers responsible for major repairs and unpaid tax bills.<\/p>\n\n\n\n

Many of these investor groups sell homes at inflated prices in the first place. And even though they are touted as interest-free, these loans do come with interest rates. They might be hidden in other contract language, but the charges are there \u2014 and they are high.<\/p>\n\n\n\n

If the buyers fall behind in their loan repayments, they\u2019re out on their ears. Then the seller-lenders can \u201cchurn\u201d the homes back into the market, and make even more money.<\/p>\n\n\n\n

Under the Truth in Lending Act, lenders must lay out rates and payment schedules. And when loans have exceptionally high rates, extra protections are supposed to apply. The Act limits treacherous balloon payments, which contracts for deeds often have.<\/p>\n\n\n\n

The CFPB\u2019s director, Rohit Chopra, says: \u201cThe government is taking action to ensure that these products do not turn the dream of homeownership into a nightmare.\u201d<\/p>\n\n\n\n

Historic Redlining Settlements, With One Credit Union After Another<\/h2>\n\n\n\n
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The Consumer Financial Protection Bureau is also focused on getting redlining<\/a> out of mortgage lending.<\/p>\n\n\n\n

The CFPB together with the U.S. Justice Department settled a case in October in which it charged a corporation with sidelining minority home seekers in Birmingham, Alabama.<\/p>\n\n\n\n

Wisconsin-based Fairway Independent Mortgage Corp. (doing business as MortgageBanc in and around Birmingham) is one of the top three wealthiest U.S. mortgage companies. The two agencies alleged that MortgageBanc\u2019s activities offended several federal laws:<\/p>\n\n\n\n