Predatory lending focus of seminar

In response to concerns from local lenders and real estate agents, the U.S. Department of Housing and Urban Development came to Cape Girardeau Thursday to warn people of predatory lending practices.

Frank Montgomery, an equal opportunity specialist with HUD, came to the Drury Lodge to speak to over a dozen area bankers, loan officers, real estate agents and concerned members of the public about unscrupulous practices that are sometimes used when purchasing or refinancing a home.

"If we don't stop predatory lending, the community will deteriorate," said Montgomery. "It results in foreclosures, the decrease in property values and unstable neighborhoods."

Montgomery said predatory lending includes lenders who grant unreasonable loans to those with poor credit, companies that prey on the elderly and lenders who tell borrowers they are high risk when they are not.

"Borrowers need to shop around and take time to talk to friends, even an attorney if necessary," Montgomery said. He said that they also need to be on the lookout for unusual terms in loans, like high closing costs and unreasonable adjustable interest rates.

Montgomery said that in the investigations he's done for HUD, he's seen home loans with adjustable interest rates that rose as high as 24 percent to borrowers with poor credit. The adjustable rate should never exceed six points over the prime rate.

Sandy Schooley, president of Best Mortgage and Financial Group Inc., was a local organizer of the seminar. She said another important precaution for borrowers is to know their credit score when they apply for a loan.

trehagen@semissourian.com

335-6611, extension 137