Stephanie Lund’s Post

Predatory lending is a deceptive practice where lenders target vulnerable consumers by offering loans with exorbitant interest rates, hidden fees, and misleading terms. These loans can trap borrowers in a cycle of debt, leading to financial ruin. Understanding the tactics used by predatory lenders is crucial to protecting yourself. 𝗛𝗼𝘄 𝗣𝗿𝗲𝗱𝗮𝘁𝗼𝗿𝘆 𝗟𝗲𝗻𝗱𝗶𝗻𝗴 𝗪𝗼𝗿𝗸𝘀 Predatory lenders often target individuals with poor credit, low income, or limited financial knowledge. Common tactics include: 𝗛𝗶𝗴𝗵-𝗜𝗻𝘁𝗲𝗿𝗲𝘀𝘁 𝗥𝗮𝘁𝗲𝘀: Exorbitant interest rates can quickly turn a small loan into a massive debt burden. 𝗕𝗮𝗹𝗹𝗼𝗼𝗻 𝗣𝗮𝘆𝗺𝗲𝗻𝘁𝘀: Large, final payments that borrowers may be unable to afford. 𝗣𝗿𝗲𝗽𝗮𝘆𝗺𝗲𝗻𝘁 𝗣𝗲𝗻𝗮𝗹𝘁𝗶𝗲𝘀: Fees charged for early loan repayment. 𝗘𝗾𝘂𝗶𝘁𝘆 𝗦𝘁𝗿𝗶𝗽𝗽𝗶𝗻𝗴: Lenders encourage borrowers to use their home equity as collateral, putting their property at risk. 𝗙𝗹𝗶𝗽𝗽𝗶𝗻𝗴 𝗟𝗼𝗮𝗻𝘀: Lenders refinance existing loans with new, higher-cost loans. 𝗧𝗮𝗿𝗴𝗲𝘁𝗶𝗻𝗴 𝗩𝘂𝗹𝗻𝗲𝗿𝗮𝗯𝗹𝗲 𝗣𝗼𝗽𝘂𝗹𝗮𝘁𝗶𝗼𝗻𝘀: Predatory lenders often prey on seniors, minorities, and individuals experiencing financial hardship. 𝗣𝗿𝗼𝘁𝗲𝗰𝘁𝗶𝗻𝗴 𝗬𝗼𝘂𝗿𝘀𝗲𝗹𝗳 𝗳𝗿𝗼𝗺 𝗣𝗿𝗲𝗱𝗮𝘁𝗼𝗿𝘆 𝗟𝗲𝗻𝗱𝗶𝗻𝗴 𝗨𝗻𝗱𝗲𝗿𝘀𝘁𝗮𝗻𝗱 𝗬𝗼𝘂𝗿 𝗢𝗽𝘁𝗶𝗼𝗻𝘀: Explore all available loan options before making a decision. 𝗥𝗲𝗮𝗱 𝘁𝗵𝗲 𝗙𝗶𝗻𝗲 𝗣𝗿𝗶𝗻𝘁: Carefully review loan terms and conditions. 𝗕𝗲𝘄𝗮𝗿𝗲 𝗼𝗳 𝗛𝗶𝗴𝗵-𝗣𝗿𝗲𝘀𝘀𝘂𝗿𝗲 𝗧𝗮𝗰𝘁𝗶𝗰𝘀: Legitimate lenders won't pressure you into making hasty decisions. 𝗕𝘂𝗶𝗹𝗱 𝗚𝗼𝗼𝗱 𝗖𝗿𝗲𝗱𝗶𝘁: A strong credit history can help you qualify for better loan terms. 𝗦𝗲𝗲𝗸 𝗙𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗖𝗼𝘂𝗻𝘀𝗲𝗹𝗶𝗻𝗴: A credit counselor can provide guidance on managing your finances and avoiding predatory loans. Know Your Rights: Familiarize yourself with consumer protection laws and regulations. 𝗧𝗮𝗸𝗶𝗻𝗴 𝗔𝗰𝘁𝗶𝗼𝗻 If you believe you've been a victim of predatory lending, take the following steps: 𝗖𝗼𝗻𝘁𝗮𝗰𝘁 𝗬𝗼𝘂𝗿 𝗦𝘁𝗮𝘁𝗲 𝗔𝘁𝘁𝗼𝗿𝗻𝗲𝘆 𝗚𝗲𝗻𝗲𝗿𝗮𝗹'𝘀 𝗢𝗳𝗳𝗶𝗰𝗲: Many states have consumer protection agencies that can assist with predatory lending complaints. 𝗗𝗼𝗰𝘂𝗺𝗲𝗻𝘁 𝗘𝘃𝗲𝗿𝘆𝘁𝗵𝗶𝗻𝗴: Keep copies of all loan documents, payment records, and communication with the lender. 𝗦𝗲𝗲𝗸 𝗟𝗲𝗴𝗮𝗹 𝗔𝗱𝘃𝗶𝗰𝗲: Consider consulting with an attorney who specializes in consumer protection. By understanding the tactics used by predatory lenders and taking proactive steps to protect yourself, you can avoid falling victim to this harmful practice.

#HomeLoanHacks: Trust Lending: Myths Vs Facts! If you have any trust issues, this post is for you! How the Internet Thinks It Works (Myths/Misunderstandings) vs Facts: - Myth: Lenders can’t see loans under a trust on your credit report because the trust acts as a magical blanket that hides it all. - Fact: It DOES show up on your credit report. It includes the loan amount, bank name, reference number, and YOU as a guarantor. L - Myth: Buying a property under a trust makes it a liability for the trust, not you. - Fact: If you bought property and have a loan under a trust with a corporate trustee structure, then SOME lenders will consider it as a company liability, not yours, if you can provide an accountant's letter confirming that the trust is self-sufficient (can pay its own expenses and liabilities). - Myth: Refinancing or moving existing loans under a trust frees up your borrowing capacity. - Fact: You are basically transferring the property to a different entity; hence you have to pay stamp duty on the price you are transferring it, which may mean you are paying tens of thousands of dollars for this. So do the cost/benefit analysis if you have to go down this route. - Myth: Borrowing power increases under a trust. - Fact: Under the trust structure, your borrowing capacity is less compared to your personal name. You can't claim negative gearing under the trust, so that reduces your borrowing capacity as is. - Myth: You pay higher interest rates for lending under trusts.* - Fact: No! Not if you know which lenders to go to. Most lenders have the same rates for borrowing under your personal name or under a trust. Only 2-3 lenders charge a premium of 0.05% - 0.10%, so you can easily avoid those lenders. What You Need to Consider When Borrowing Under Trusts: - Have a knowledgeable accountant and a broker who knows what he is doing. - A broker who can strategize which lenders to go to and in which order. Broker is your sole guide on this journey since he knows which lenders has these policies and out of them which are suitable for you. - Whether you need to set up a new trust for every purchase? The answer may or may not be yes depending on your remaining borrowing capacity. So you'll need to consider setup costs. -Not every bank can provide an offset facility under the trust structure. If that is important for you, discuss it with your broker so they can suggest lenders accordingly. - Lenders' policies and appetite can change. Be mindful that these favorable policies may not last for very long. Recently, one of the major players stopped going into LMI territory (over 80% LVR) for loans under trusts. Use these favorable policies while you can.

My name is Janet Oni and I am digital collection&loan recovery officer at sterling bank plc Let talk about loan collection& loan recovery 👇🏽 WHAT IS DEBT RECOVERY PROCESS? There are a number of ways to enforce a debt such as an attachment of earnings orders or charging orders. However, the most common method is to instruct a Bailiff or High Court Enforcement Officer to visit the debtor's address and collect the debt or seize goods to the value of the debt. WHAT IS LOAN RECOVERY MANAGEMENT? Recovery Management is thus concerned with designing and implementing a collection of strategy to recover the debts without losing customers. Recovery measures could be legal and non-legal :- Banks could adopt legal measures to recover loans by filing a suit in civil court or filing an application before the DRTs. Manage multiple delinquent accounts for debt collection efforts. Keep track of assigned accounts to identify outstanding debts. Plan a course of action to recover outstanding payments. Negotiate payoff deadlines 4 LOAN RECOVERY TECHNIQUES EVERY LENDER MUST KNOW 👇🏽 1. Understand applicants creditworthiness 2.automate collection 3.monitor customer’s activities 4.Use of loan origination system 1. Understand the applicant’s creditworthiness better Nothing could help a lender quicken their loan recovery process better than ensuring they only lend to credible customers in the first place. Lenders must explicitly communicate they lend to people who have an excellent credit score and the potential to repay the loans on time. 2. Automate collections Debt collection can no longer be a manual strategy, and lenders need to ensure enough means to collect timely payments from borrowers without any human intervention 3. Monitor customers’ activities in real-time Lenders can benefit from keeping a check on the real-time activities of their borrowers through pre-defined systems. For example, whenever a borrower makes a payment, the lender’s team is notified and kept in the loop 4. Use of loan origination systems As mentioned above, it is always a good idea to deploy the latest loan origination system software into the processes of a traditional lending firm. The vast expanse of services offered by this software helps cut down the loan turnaround time substantially and helps save tremendous amounts of time, effort, and cost in the process. Most modern-day loan origination systems are excellent tools that offer out-of-box integration using APIs for gathering alternative credit data sources. This feature can prove to be fruitful in arriving at quality lending decisions. These sophisticated systems extract data from credible sources and present it in one standardised format for the lender’s perusal, highlighting the applicant’s creditworthiness much better. #loanrecovery #banking #business #digitalcollection

What is predatory lending? Predatory lending refers to unethical practices that exploit borrowers, often through high fees, excessive interest rates, and deceptive terms. These practices typically target vulnerable individuals who may have limited financial knowledge or poor credit histories. Common tactics include offering loans with terms that the borrower cannot realistically meet, leading to a cycle of debt and financial hardship. Predatory lenders may also engage in aggressive marketing and obscuring the true costs of the loan. To protect your financial health, you need to recognize the rad flags of such lenders and avoid them. Predatory lending can take many forms, including payday loans, subprime mortgages, and car title loans. Payday loans, for instance, often come with exorbitant interest rates and short repayment periods, making it difficult for borrowers to repay on time. Subprime mortgages, which are targeted at individuals with poor credit, can include hidden fees and balloon payments that make homeownership unaffordable in the long run. Car title loans use a borrower’s vehicle as collateral, often resulting in the loss of the auto if the borrower cannot repay the loan. The consequences of predatory lending are severe, leading to financial instability, damaged credit scores, and in extreme cases, loss of assets like homes and cars. Borrowers often find themselves trapped in a cycle of debt, where they must take out new loans to repay existing ones, perpetuating their financial distress. Legislation and regulation are crucial in combating predatory lending. Laws, such as the Truth in Lending Act (TILA) and the Dodd-Frank Wall Street Reform and Consumer Protection Act, aim to increase transparency and protect consumers from abusive lending practices. However, it is also important for consumers to educate themselves about the signs of predatory lending. Key red flags include loans that promise instant approval without credit checks, excessively high-interest rates, unclear terms or hidden fees, and pressure tactics from lenders. Financial literacy and awareness are powerful tools in preventing predatory lending. Consumers should seek advice from reputable financial advisors, utilize resources from consumer protection agencies, and thoroughly research lenders before entering into any loan agreements. Borrowers need to ensure they understand the loan terms and conditions, calculate the true borrowing cost, and know their rights so as not to fall victim to predatory lenders.

Predatory Lending and Steering: A Cautionary Tale for Borrowers In the financial world, "predatory lending" is a term that brings to mind images of deceitful loan sharks and unethical lenders taking advantage of the vulnerable. It includes various harmful practices where lenders impose unfair and abusive loan terms on borrowers. These can include high-interest rates, excessive fees, and terms that strip borrowers of equity, often trapping them in a cycle of debt that's hard to escape. What is Predatory Lending? Predatory lending involves lending practices that are unfair, deceptive, or abusive. Some common signs of predatory lending include: Exorbitant Interest Rates: Charging rates far higher than the market average. High Fees: Imposing excessive fees that aren't justified by the loan amount or terms. Equity Stripping: Setting up terms that strip the borrower of home equity, leaving them with little or no value in their property. Understanding Steering. Steering is a specific type of predatory lending. It involves guiding creditworthy borrowers towards more expensive loans than they qualify for. This can happen when: Lenders Push for Higher Fees: Lenders may guide borrowers to loans with higher fees, which benefits the lender more. Unfavorable Loan Products: Borrowers are led to accept loan products that are less favorable than other available options. The Impact of Predatory Lending The economic impact of crises like the COVID-19 pandemic has left many consumers cash-strapped and vulnerable to such predatory practices. Small businesses, in particular, have been prime targets, with some lenders disguising their predatory loans as "cash advances" or other misleading terms. Who is Most Affected? Predatory lending disproportionately affects marginalized communities. These groups often have fewer credit options and may urgently need funds, making them more susceptible to aggressive sales tactics and deceptive practices. To combat predatory lending, education is key. Borrowers need to be aware of the signs of these practices and understand the long-term consequences. Here are some steps to protect yourself: Research Loan Terms: Always read and understand the terms of any loan before signing. Compare Rates: Shop around and compare rates from different lenders. Seek Advice: Consult a financial advisor or a trusted friend/family member before making decisions. Legislation also plays a crucial role in protecting borrowers. For instance, U.S. Rep. N Velázquez introduced a bill aimed at protecting small business borrowers from predatory lenders by ensuring that safeguards in consumer lending also apply to small business credit markets. Predatory lending and steering are harmful practices that exploit borrowers, leading to long-term financial damage. By staying informed and cautious, and by supporting legislative efforts to curb these practices, borrowers can protect themselves from falling victim to these unethical schemes.

𝐑𝐢𝐬𝐤 𝐀𝐬𝐬𝐞𝐬𝐬𝐦𝐞𝐧𝐭 𝐢𝐧 𝐂𝐨𝐦𝐦𝐞𝐫𝐜𝐢𝐚𝐥 𝐋𝐞𝐧𝐝𝐢𝐧𝐠: 𝐇𝐨𝐰 𝐭𝐨 𝐞𝐯𝐚𝐥𝐮𝐚𝐭𝐞 𝐚𝐧𝐝 𝐦𝐚𝐧𝐚𝐠𝐞 𝐫𝐢𝐬𝐤𝐬 𝐚𝐬𝐬𝐨𝐜𝐢𝐚𝐭𝐞𝐝 𝐰𝐢𝐭𝐡 𝐜𝐨𝐦𝐦𝐞𝐫𝐜𝐢𝐚𝐥 𝐥𝐨𝐚𝐧𝐬! Transitioning from residential mortgages to commercial loan brokerage requires a shift in risk assessment strategies. Here's a breakdown for residential MOs venturing into the commercial lending world: 𝐁𝐞𝐲𝐨𝐧𝐝 𝐂𝐫𝐞𝐝𝐢𝐭 𝐒𝐜𝐨𝐫𝐞𝐬: 𝐀 𝐇𝐨𝐥𝐢𝐬𝐭𝐢𝐜 𝐀𝐩𝐩𝐫𝐨𝐚𝐜𝐡 𝟏. 𝐑𝐞𝐬𝐢𝐝𝐞𝐧𝐭𝐢𝐚𝐥 𝐌𝐨𝐫𝐭𝐠𝐚𝐠𝐞𝐬: Rely heavily on credit scores and borrower income verification for risk assessment. 𝟐. 𝐂𝐨𝐦𝐦𝐞𝐫𝐜𝐢𝐚𝐥 𝐋𝐨𝐚𝐧𝐬: Involve a comprehensive risk assessment considering various factors: - 𝐁𝐨𝐫𝐫𝐨𝐰𝐞𝐫 𝐑𝐢𝐬𝐤: Financial health of the borrower's business, including financial statements, industry experience, and management team strength. - 𝐏𝐫𝐨𝐩𝐞𝐫𝐭𝐲 𝐑𝐢𝐬𝐤: Location, value, marketability, income potential (for income-producing properties), and potential environmental concerns. - 𝐌𝐚𝐫𝐤𝐞𝐭 𝐑𝐢𝐬𝐤: Economic trends, industry-specific risks, and potential fluctuations in property values. - 𝐓𝐫𝐚𝐧𝐬𝐚𝐜𝐭𝐢𝐨𝐧 𝐑𝐢𝐬𝐤: Complexity of the deal, legal considerations, and the quality of loan documentation. 𝐑𝐢𝐬𝐤 𝐌𝐢𝐭𝐢𝐠𝐚𝐭𝐢𝐨𝐧 𝐒𝐭𝐫𝐚𝐭𝐞𝐠𝐢𝐞𝐬: 𝟏. 𝐋𝐨𝐚𝐧 𝐒𝐭𝐫𝐮𝐜𝐭𝐮𝐫𝐢𝐧𝐠: Customize loan terms like loan-to-value ratios (LTVs), interest rates, and repayment schedules to mitigate risk based on the borrower's profile and property type. 𝟐. 𝐂𝐨𝐥𝐥𝐚𝐭𝐞𝐫𝐚𝐥 𝐑𝐞𝐪𝐮𝐢𝐫𝐞𝐦𝐞𝐧𝐭𝐬:May include the financed property itself, additional assets, or personal guarantees from owners or principals. 𝟑. 𝐂𝐨𝐯𝐞𝐧𝐚𝐧𝐭𝐬 & 𝐑𝐞𝐬𝐭𝐫𝐢𝐜𝐭𝐢𝐨𝐧𝐬: Include clauses in loan agreements that limit the borrower's actions to protect the lender's interests (e.g., restrictions on taking on additional debt). 𝟒. 𝐃𝐮𝐞 𝐃𝐢𝐥𝐢𝐠𝐞𝐧𝐜𝐞: Thorough examination of the borrower's financials, property, and market conditions to identify potential risks. 𝐔𝐧𝐝𝐞𝐫𝐬𝐭𝐚𝐧𝐝𝐢𝐧𝐠 𝐑𝐢𝐬𝐤-𝐁𝐚𝐬𝐞𝐝 𝐏𝐫𝐢𝐜𝐢𝐧𝐠: - Interest rates and loan terms are determined not just by creditworthiness, but also by the overall risk profile of the deal. Higher-risk loans will typically have higher interest rates to compensate for the increased risk. 𝐓𝐡𝐞 𝐈𝐦𝐩𝐨𝐫𝐭𝐚𝐧𝐜𝐞 𝐨𝐟 𝐂𝐨𝐧𝐭𝐢𝐧𝐮𝐨𝐮𝐬 𝐌𝐨𝐧𝐢𝐭𝐨𝐫𝐢𝐧𝐠: - Risk assessment is not a one-time event. Regularly monitor the borrower's financial performance, property values, and market conditions to identify potential problems early on. By mastering risk assessment techniques, you can ensure informed lending decisions, protect your clients, and build trust with lenders in the commercial loan space. Do you have any tips for effective risk assessment in commercial lending? Share your insights in the comments! #commercialfinance #loanbrokerage #riskmanagement

Agency Lending Update – 9.11.24 💵 Freddie Mac and Fannie Mae are actively reviewing their pipelines and estimating their year-end volumes. While Freddie currently holds a solid lead over Fannie, both agencies are expected to fall short of their 2024 volume targets, leading to competitive pricing for borrowers. Despite facing the longest pre-review queues we've seen to date, the wait is proving worthwhile. We are securing more 35-year amortization and full-term interest-only quotes than ever before. Freddie's typical queue time is about 2-3 weeks, while Fannie’s ranges from 3-4 weeks. These wait times are expected to decrease, though likely not until next year, when both agencies can address staffing shortages and work through the existing backlog. In the meantime, we can still provide quotes within a few days. Fannie is still able to round trip a deal under 30 days when necessary while it may take a little more time with Freddie. However, if a deal involves an exception or requires 35-year amortization, the pre-review queues will ultimately dictate the timeline. So, if there are any deals you are trying to get in by year end, start the conversations now. To share further insight on current pricing, here is a deal we just quoted: -         Loan Amount: $28,250,000 -         Loan Term: 5-Year Fixed -         Max LTV: 70% -         Interest Rate: 4.78% (5-Year T + 131 bps with 38 bp buydown) -         Amortization: 3 Years IO then 35 Years -         Min DSCR: 1.25X -         Guaranty: Non-Recourse

Caution Ahead: Red Flags in Private Real Estate Lending     Safe investing starts with knowing the red flags Finding reliable private lenders for real estate investment requires a combination of research, networking, and due diligence. Be aware of the following warning signs: 1. Unlicensed or unregistered - Ensure the private lender is properly licensed and registered to operate in New Zealand. 2. Unusual or excessive fees - Be cautious of lenders charging unusually high fees, such as origination fees, closing costs, or hidden charges. 3. High-pressure sales tactics - Be cautious of lenders who use high-pressure sales tactics to rush you into a loan agreement. This could be a sign of a predatory lender who is more interested in closing the deal than in your financial well-being. Some common high-pressure sales tactics to watch out for include - urgency to sign the loan agreement immediately, limited-time offers that expire quickly, threats of higher interest rates or fees if you don't sign immediately, downplaying or hiding the risks and terms of the loan. 4. Lack of transparency - Be suspicious of lenders who are evasive or secretive about their loan terms, interest rates, or fees. 5. Poor reputation - A lender's reputation is crucial in determining their credibility and trustworthiness. A poor reputation can be a significant red flag, indicating a higher risk of fraud, unethical practices, or poor service. To research a lender's reputation, you can check online reviews and ratings from multiple sources. 6. No clear exit strategy - A clear exit strategy is crucial in private lending, as it outlines the plan for repaying the loan or exiting the investment. A lender without a clear exit strategy may be unprepared for the future or unwilling to disclose their plans. 7. Unusual or unfavourable loan terms - Be wary of lenders who offer unusually long or short loan terms or unfavourable conditions. 8. Unresponsive or uncommunicative - Be cautious of lenders who are unresponsive or uncommunicative. 9. Inflexible terms - Inflexible terms in private lending can be a sign of a lender who is unwilling to work with you or accommodate your needs. This can lead to a loan agreement that is heavily skewed in favour of the lender, putting you at a disadvantage. Some signs of inflexible terms include unwillingness to negotiate interest rates, fees, or repayment terms, strict and rigid loan conditions with no room for flexibility. Remember to do your due diligence and carefully evaluate the terms and conditions of any private lending agreement before committing to a loan. It's better to take the time to ensure that your lender is credible and that the terms of the loan are fair and transparent. #RealEstateInvestingTips #LendingRedFlags #InvestorBeware #PrivateLenderRedFlags #SmartInvestingStrategies #AvoidingInvestmentScams #PrivateLendingPitfalls #RealEstateInvestmentSecurity #AucklandRealEstate #RealEstateAgent