The United States Senate Committee on Banking, Housing & Urban Affairs met yesterday, October 16, to discuss the current financial crisis plaguing the country. The hearing, entitled, “Turmoil in the U.S. Credit Markets: The Genesis of the Current Economic Crisis,” was headed by Senator Dodd of Connecticut, featuring such speakers as Arthur Levitt, Jr, Senior Advisor of the Carlyle Group and Marc H. Morial, President and CEO of the National Urban League. Speakers offered insight on the “deeply serious and destructive market crisis” and their views on the best course of action in the present and possible preventable measures for the future.
In outlining the various factors leading up to this financial dilemma, manypanelists cited the importance of consumer education. As analysts, Congress members and government officials scramble to assess the effects of the current financial turmoil, take care to look into your financial situation and become informed about smart practices. One way to do this is to be wary of shoddy lending practices when you find yourself in the market for a loan. Predatory lending is just one example of unsavory lending. These lenders target low-income and minority neighborhoods and make false promises about easy access to credit.
Some Warning Signs of Predatory Lending:
-High-pressure and/or misleading marketing sales and efforts;
-Excessive fees and interest rates at levels well beyond what is needed to cover risk and make a reasonable profit;
-Large prepayment penalties that trap borrowers in an unaffordable loan;
-Aggressive or abusive collection practices.
It is important to note that predatory loans, while they are made to subprime borrowers, are not subprime loans. Predatory lenders use marketing tactics, collection practices and loan terms that are intended to deceive and exploit. For more information, view WISER’s Predatory Lending fact sheet on the WISER website.