It’s a request everyone has heard: “Sign this form in triplicate, please.” But when an Emporia woman did that last year, she found she hadn’t signed three copies — she had signed three $25,000 loans.
For one roof repair.
“With the best roofing job in the world, you’re not going to spent $75,000 on a 1,200 square-foot roof,” said Patty Gilligan, the city’s human relations coordinator. When the woman came to her, she forwarded it on to the Kansas Attorney General who soon brought the hammer down on the would-be lender, an out-of-town Kansas company.
That’s one of the more blatant examples of predatory lending that Gilligan has seen in recent years. But it’s hardly the only one.
There’s no federal definition of predatory lending and different states define it differently. Basically, it’s when a borrower sets abusive terms for a loan or otherwise traps a borrower into increased debt. The elderly, minorities and women tend to be the most frequent targets, but anyone can get hit.
“I particularly worry about the elderly,” Gilligan said after Wednesday’s city commission meeting, when commissioners proclaimed “Fair Housing Month” for April. “They’re more likely to have someone do the door-to-door thing when they’re considering home repairs. Anyone that is easily confused is vulnerable to these folks.”
These days, predatory tactics have even been known to crop up among the nation’s legitimate lenders, Gilligan told Emporia city commissioners on Wednesday. Some examples might be the use of balloon payments to mask a high-cost loan or the bundling of insurance and other unneccessary products into a loan amount.
So how do you avoid the sharks? Gilligan suggested the following:
• Be wary of a lender who gives you something to sign without offering you a copy — especially if he says he can’t.
• If they give you a copy, read it. Carefully.
• Make sure the lender tells you you have the right to look over the loan after you sign the forms and back out of the loan without a penalty.
• Have somebody you trust look over a copy of the loan agreement, such as a real estate agent you know or an employee of your credit union.
• If you think you’ve been taken advantage of, call Gilligan at 343-4291.
“You have to be savvy,” Gilligan said. “Sometimes you can see up front that the terms are out of line.”