Predatory lenders mar mortgage industry

     Caveat emptor -- let the buyer beware.
      We've all been told to read the fine print before signing a legal document.
      Well, first of all, those documents are written in legalese, which means only a lawyer could understand the fine print. And secondly, when those documents are mortgage papers, the borrower is given a stack two inches high to sign.
      The buyer usually is trying to race the clock to get the papers filed, so he can get the key to the house because the movers are on their way with his furnishings.
      No stress there.
      What it usually boils down to is the buyer is at the mercy of the builder, the lender and the title company. I know many builders, lenders and title company representatives who would take umbrage at that remark, but it's a fact.
      We are fortunate in Las Vegas that the builders, lenders and title companies are, for the most part, run by conscientious citizens who are looking out for the best interests of their clients. But there are horror stories around the country about what is commonly known as predatory lending. These institutions provide capital to borrowers who otherwise might not qualify for a loan.
      Three practices common to predatory lenders are equity stripping, flipping and packing.
      In equity stripping, a lender extends the loan based upon the equity in a home, rather than the borrower's ability to pay.
      Flipping involves convincing a borrower to sign several succeeding loans, each refinancing the previous loan, thereby flipping the borrower into one loan after another.
      Packing occurs when a lender packs a loan with unnecessary credit insurance and fees that increase the amount to be repaid.
      So far, predatory lending has rarely raised its ugly head in Nevada, but officials in the state attorney general's office and Financial Institutions Division are keeping a watchful eye on the situation.
      There are no laws on the books to prevent the growth of predatory lending in Nevada, but Sen. Mike Schneider, D-Las Vegas, says it is one issue that will be addressed at next year's session of the Legislature.
      "People are easily sold into a product such as this," Schneider said. "People are busy and don't read the fine print, because these papers are written in legalese and are confusing with financing terms such as `points.'"
      Schneider said any action the Legislature would take would be to force lending companies to streamline their loan documents.
      "It would require the lenders to use straight talk and make the papers easier to read with bullet points, etc."
      Nationally, banks are joining with other institutions such as Fannie Mae in an attempt to stop predatory lending.
      Congress is looking into the practice through the Capital Markets Subcommittee of the House Banking Committee. Frank Raines, chairman and chief executive officer of Fannie Mae, addressed the panel in May, outlining anti-predatory policies for the loans it buys from lenders.
      There are always some unscrupulous people who are out to earn a buck off the backs of honest citizens. No matter how many laws are in place or how much oversight, it still boils down to one thing: Caveat emptor.
      n Lois Masho's affiliation with the Sun City Summerlin Computer Club was misrepresented in my July 30 column. Mrs. Masho is an active member of the club.
      Carmel Hopkins, Real Estate Product Manager for the Las Vegas Review-Journal and Las Vegas Sun, can be reached at 380-4574. Her e-mail address is Carmel_Hopkins@lasvegasnewspapers.com. Snail mail is P.O. Box 70, Las Vegas, NV 89125.

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