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Iowans should take precautions to avoid becoming a victim of a "Predatory Lender."  Predatory lenders take advantage of unsuspecting consumers by  marketing and making mortgage loans with vastly inflated interest rates and fees and other burdensome terms.  Predatory lending is a serious problem throughout the country, one that can leave you penniless and homeless.  Elderly Iowans are especially at risk  because they often have substantial equity in their homes, low fixed incomes, and a need for funds to pay medical bills or home repairs.  Signs of predatory lending include:

Extensive and Aggressive Marketing.  Predatory lenders advertise through television commercials, direct mail and door-to-door solicitations.  Written solicitations may look like social security or other government checks to prompt homeowners to open the envelopes.  Some companies start with telephone calls, followed by increasingly intrusive "home visits."  Such deceptive and strong-arm tactics can break down defenses and result in expensive and unwanted loans. 
 
Price Gouging.  Predatory lenders often charge high fees and/or interest rates.  For example, a predatory lender may charge you 8% to 20% of the loan in fees, compared to a normal cost of 0% to 3%.

Pushing Insurance.  Predatory lenders often push high cost insurance policies.  This can be very expensive and often has little value to the consumer.
 
Pushing Home Improvement. Predatory lenders often use local home improvement companies to steer homeowners to the lender.  The home improvement company may receive a fee for referring the homeowner, which is added to the cost of the loan, or which raises the price of the work if you finance it.  To make matters worse, homeowners often end up with shoddy work or are grossly overcharged by the improvement company. 

• Encouraging Refinancing.  Predatory lenders often encourage homeowners to refinance other mortgage or credit card debt.  This increases the size of the loan and the lender's earnings from charging high rates and fees.  It also increases the cost of your overall debt and the risk of losing your home.

Some Do's and Don'ts for Iowans who Need Money:

• Do take care to deal with reputable lenders.  Before agreeing to any loan, check for terms available from your local community bank or credit union.  
  
• Do be especially cautious if you see any of the above warning signs in connection with a loan.  
  
• Do compare all costs of credit from several different lending sources before making a borrowing decision.
  
• Don't borrow money just because someone offers it to you.  
  
• Don't let a contractor arrange financing for you.
  
• Don't become a victim to predatory lending.