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Company Loan Type APR Est. Pmt.

Predatory Loan and the application of HOEPA/TILA protection

Posted on: 06th Dec, 2006 10:26 am
We signed for a hard equity loan funded by a private investor. 6 Months later we fell behind in our payments and they foreclosed. This loan meets all the requirements of a Predatory Loan (violations of various items as they pertain to HEOPA & Florida Fair Lending). When we brought these disclosures up as a valid defense they said they were invalid. The reason is that the loan contained a business purpose affadavit single page form and that excluded this loan from TILA/HOEPA disclosures consumer protection because it is a business loan. They lent me the money based upon my equity in our personal single family house (homestead), never conducted an appraisal never looked into our ability to repay. There saying they dont have to do any of that. Sorry you lose. Is this right? Seems very unfair because now they want to get a summary judgement against us and sell our house and pocket all the equity. Can you help and advise. Thanks.
"The reason is that the loan contained a business purpose affadavit single page form and that excluded this loan from TILA/HOEPA disclosures consumer protection because it is a business loan."
I have read that business loans are not covered by TILA (under section 226.3) as the loan should be mainly for family, household or personal purpose. So they might be correct on that.
Posted on: 06th Dec, 2006 11:40 am
Hi Dpeters,

I don't think the loan is predatory. This is b'cause business loans and residential mortgage loans have different types of rules and regulations. Moreover, you have taken hard money loans which have different criteria and features compared to that of the usual mortgage loans. That is why I believe the investor has not given you TILA/HOEPA disclosures. But yes, they should have done an appraisal as the amount of loan offered by a hard money lender depends upon the quick sale value (current purchase price) of the property.

Thanks
James
Posted on: 06th Dec, 2006 09:27 pm
Hi Dtpeters,

In general, mortgage lenders are concerned about a borrower's credit score and his ability to pay off the loan; but hard money lenders are not so much concerned about the borrower's credit worthiness, they are worried more about the property against which they offer the loan. To them, the property is a good source of investment and not the borrower.

The lending criteria may vary from one hard money lender to another depending upon their requirements and ability to handle risks. It's not like usual mortgage lenders offering loans on the basis of general criteria. Just like the lending criteria, the rules of foreclosure may also be different in case of hard money loans.

It may seem unfair to you, as losing your home is indeed painful. But I think you should talk to the investor and enquire about the rules of foreclosure for hard money loan. Request him to suspend payments for a few months and try to accumulate some funds within this period. This will help you to pay the loan and keep your home with you.

Thanks
Posted on: 06th Dec, 2006 10:20 pm
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