Predatory Lending Laws in Colorado
Predatory lending can leave you homeless and defeated, with ruined credit.
It is the taking of unfair advantage of a borrower by deception or fraud. In most cases, the loans cannot be repaid the your equity goes to the lender. Especially when you refinance your home.
Many of these loans include an Adjustable Rate Mortgage (ARM), where the initial interest rate is a “teaser” rate to get you to bite. Then the loan interest rate adjusts upward until you have to refinance or sell the home. With high prepayment penalties. Or, you let it go in foreclosure.
What do Predatory Lenders Do?
1. Flip your loans, so that you are refinancing your home without any real benefit to you;
2. Charge excessive fees, lender kickbacks to the mortgage broker, high interest rates, adjustable interest rates, and high prepayment penalties. The result is that the equity in your home goes to the mortgage broker or lender.
3. Trap you and take your equity and savings, so that you lose you home because you cannot make the payments.
4. Make sure that you have to refinance your home again, because your monthly payment keeps going up where you can no longer pay it.
Essentially all Adjustable Rate Mortgage (ARM) loans require that you refinance the loan within 1 to 5 years in order to keep your home. Because the interest rate and monthly payment keeping increasing to the point where you cannot make your monthly payments.
The loans usually also include very high mortgage broker fees, lender kickbacks to mortgage brokers, junk fees, closing costs, prepayment penalties, and mandatory arbitration requirements.
Often, the mortgage broker steers business to partners, such as certain title companies and a certain real estate broker (Realtor.) These business partners usually charge very high fees and “look the other way” when you ask questions about the predatory loan.
Beginning with new 2002 and 2007 laws in Colorado, predatory lending in Colorado is prohibited. See previous page. You may recover 3 times your damages plus attorney fees. You may also be able to cancel your mortgage lien (deed of trust) if specific legal disclosures are not provided, particularly when you refinance your home.