Dangerous Loans

They call you at supper time. They send you junk mail. They sometimes even come to your door. These people are trying to sell you something you can’t live without. Some are legitimate, but most are out to get your money. The worst ones and the most dangerous ones are the ones being called "predatory lenders."

The definition of the word "predator" is one who is a thief, a poacher, a bandit, a pillager, a raider, and a wrecker. That’s what they can do to your life and your home if you aren’t careful. If you look in the newspaper on the back pages, you will see listings of homes that are being foreclosed upon. Many of these folks have fallen prey to a predatory lender.

What they steal is the equity in your home. Equity is the difference between what you owe on your house and what it’s worth. Most of the time, that equity is your single greatest asset. That’s why they go after it.

There are many scams out in our neighborhoods. They sound too good to be true and most of the time they are. The city is required to issue a permit for door to door solicitation if the applicant does not have a criminal background. The city in no way endorses what they are selling. All we do is issue the permit. Anyone telling you otherwise should be reported to the mayor’s office. And under no circumstances should you sign any documents. If you have already signed documents, you have three days to change your mind.

Lots of folks can fall victim. These scam artists make it sound so good. Just sign here and you can pay off all your bills. They convince you that you should make the equity in your home work for you. What they don’t tell you is that you won’t be able to afford the payment after they have added all their hidden costs. They also don’t tell you that your loan may have a balloon (great big) payment at the end of the life of the loan. If you can’t make that balloon payment, you may still lose your home after all those years of paying on it.

The City of Alliance is concerned about our neighborhoods and our citizens being victimized by these types of lenders. City Council recently passed Resolution 96-01 in support of a statewide effort to have stricter laws passed in the State of Ohio regulating predatory lenders. Many efforts are underway in other communities to stop these types of practices.

You can do your part to keep our neighborhoods in Alliance from being victimized. If someone comes to your door or a contractor calls and offers to remodel your home or put in new windows or siding, be careful. Siding generally costs around five thousand dollars and lots of local contractors can and will do it for you. The ones that call you on the phone usually offer to finance it for you. The next thing you know, you end up paying twenty five thousand for siding instead of five. And when you can’t make that payment, guess who takes your home? A predatory lender.

We have pamphlets in the mayor’s office that explain this subject much better. The pamphlet also offers suggestions on how to avoid the problem and phone numbers to call for more information. They are free and you are welcome to stop by and pick one up. You are also welcome to call the mayor’s office at 330-821-3110 for more information.