Dear Editor:

Thank you for your article on Thursday April 15, 2004, titled “Refinancing scams often grow in scope as interest rates rise.”  The Legal Aid Society of Hawaii is combating the practice of predatory lending through individual assistance and community education.

 In addition to the practices described in the April 15 article, predatory lending takes many forms.  Predatory lending refers to a wide range of harmful lending practices.  Consumers who enter into predatory transactions tend to be lower-income and often have a poor credit history.  Predatory lending can be especially damaging to consumer who need money and own or have some equity in a home.  Homeowners who did not originally comprehend the loan transaction may be relegated to homelessness, poverty and continual debt.

Some other common features of predatory mortgage loans are: “flipping” which means repeated refinancing by the same lender with little or no benefit to the borrower, inflated fees, financing of high fees and hidden or undisclosed balloon payments.  Fraudulent appraisals on real estate values, document falsification and a lack of relevant information being released to the borrowers, increasing the loan amount and/or fees just prior to closing on the loan are other indicators of predatory practices. 

Thanks to a grant from the Federal Department of Housing and Urban Development (“HUD”) the Legal Aid Society of Hawaii may assists homeowners confronted with predatory loans. We strongly encourage homeowners to contact us at (808) 527-8059 if they believe they may be a victim of predatory lending practices or face foreclosure proceedings.  If your organization would like more information on identifying and avoiding predatory loans, please contact Ryker Wada at (808) 527-8059. 

Angela J. Lovitt

Legal Aid Society of Hawaii