In many cases, consumers have been charged loan origination fees ranging from ,000 to ,000.
Title I lending increased in the 1990s, when finance companies began lending at high interest rates to borrowers with bad credit.
The loans were generally made through home-repair contractors acting as dealers for national lenders.
The proceeds of the loan were used to construct a fifty-foot decorative fence.
After the refinancing required to pay for the fence, the couple owed ,000 at 17.99% interest.
In this practice the lender charges you high points and fees each time you refinance, and may increase your interest rate as well.
If the loan has a pre-payment penalty, you will also have to unknowingly pay that as well each time you take out a new loan.Months later when you discover the true cost of your loans you may be forced to refinance again.If you take out a loan but don’t have enough income to make the monthly payments, you are being set up and will probably lose your home.Subprime lending refers to the extension of credit to higher-risk borrowers, at rates of interest and fees higher than conventional loans.Some companies have made home equity loans to minority, elderly, and low-income borrowers at interest rates as high as 20-24 percent.If a borrower defaults on the loan, the bank or finance company collects 90 percent of the principal from a fund administered by HUD.