new york | new jersey predatory lending lawyers

One of the main reasons people find it so difficult to climb out of debt in the Greater New York and New Jersey area is that lenders resort to deceptive practices to keep them in a constant cycle of borrowing. Most lenders prefer to know customers can pay the loan and offer fair terms. However, there are some who deliberately offer excessive, unfavorable terms to prey on the vulnerability of people who desperately need capital.

Consumer protection laws exist to ensure that consumers do not suffer injuries or losses as a result of unfair, deceitful, or abusive loan practices. If you feel you suffered losses because of predatory lending practices learn more about your legal rights, and consider visiting with an experienced attorney to ensure those rights are protected.

Federal and State Laws 

There are laws in place that prohibit predatory lending practices, including the Truth in Lending Act (TILA), 15 U.S.C. § 1601 et seq., and The Equal Credit Opportunity Act (ECOA), 15 U.S.C. § 1691 et seq. Additionally, there are several other federal and state laws that prohibit discriminatory practices in lending, such as the inclusion of excessive or hidden fees/charges, excessive interest charges, pre-payment penalty charges, balloon payments and providing loans to those borrowers who cannot afford repayments or will likely default based on their financial records.

These laws also protect against minimum payments that continue to increase rather than decrease and fail to cover the interest owed (known as negative amortization), as well as against requiring borrowers to forfeit their legal right to sue for predatory lending practice or forfeit their legal right to sue for fraudulent or misleading business practices.

Examples of Predatory Lending

Predatory lending takes many forms. Below are illicit practices our lawyers have experience tackling:

Mortgage Lending

This is one of the most common forms of predatory lending. In these cases, banks are not the only entities preying on distraught homeowners trying to purchase or keep their homes. Real estate professionals often also get involved in these schemes:

  • Charging excessive fees, including appraisal, origination and default fees
  • Receiving kickbacks on different types of insurance 
  • Receiving kickbacks or excessive fees related to home inspections, private mortgage insurance, or title insurance 

Student Loans

For most young people taking out student loans, this is the first significant debt they acquire. In fact, some people never take on this level of debt again. Unfortunately, lenders often prey on young college hopefuls and their parents in the following ways:

  • Making a consumer open a checking account with the student loan lender and pay additional fees to transfer the money from the checking account to the student loan payment 
  • Failing to apply appropriate payments to both principal and interest
  • Deceptive offers that actually result in increased debt while providing lower monthly principal payments

Payday Lending

Some states allow payday loan interest rates that reach as high as 400%. New Jersey sets a 30% cap on small, consumer loans, but this is still higher than most credit card interest rates and can add up quickly. Here are some predatory lending practices that make payday loans even more dangerous:

  • Egregiously high or excessive interest rates
  • Excessive finance charges
  • Hidden fees

Credit Cards

Credit cards fall right behind payday loans when it comes to high interest rates. WalletHub estimates the average credit card interest rate to be around 19.02%. Even companies that do not charge excessive interest rates may use these methods to take advantage of new and existing customers:

  • Changing terms of the credit card agreement 
  • Failure to properly apply consumer payments to balances 
  • Schemes involving payment protection plans

Vehicle Loans

According to USA Today, the average cost of a used vehicle is $20,084. Most Americans dont have this much cash available to purchase a depreciating asset outright, so they rely on loans. Unfortunately, if they have bad credit or they are not familiar with the loan process, they can fall victim to the following practices:

  • Discriminatory interest rates
  • Excessive collateral protection insurance (CPI) or CPI kickbacks
  • Any other kickback schemes with auto dealers 

Proactive Steps Against Predatory Lending

Falling victim to predatory lending is not the borrower’s fault. Companies go out of their way to market their products and services to economically vulnerable Americans who need money fast and may not have the resources or good money management skills to pay it off on time. While there is no foolproof way to prevent this, here are steps to take before entering a loan agreement.

1. Take Your Time

One of the best ways to protect yourself against predatory lending is not wait until the last minute when you really need capital to search for it. Otherwise, you may feel cornered into making financial decisions that come back to haunt you.

2. Ask Questions

Lenders generally want to give you money, so if they approve you for a loan, dont be afraid to ask questions. If something doesnt look right, ask why until you get the answers you need. Read everything before you sign.

3. Check Reviews

Before working with a lending company, check the reviews online. This is especially important if you have never heard of the company before. Customers will leave honest feedback about their experience so far. If there is no feedback, consider alternative options.

Compensation for Victims of Predatory Lending 

If you experienced any kind of injury or losses as a result of predatory lending, you may have the legal right to pursue justice and compensation for your losses under either the Truth in Lending Act or the Equal Credit Opportunity Act. Victims of predatory lending can possibly receive actual damages, punitive damages, attorney fees and equitable relief in certain circumstances. Both individual legal actions as well as class-action lawsuits are available depending on the facts and circumstances of your case.

Learn How an Experienced Attorney Can Help You 

Experienced attorneys at the Schmierer Law Group can answer your questions related to your experience involving predatory lending and help ensure that your legal rights remain protected. We welcome the opportunity to consult with you about your possible case against a predatory lender engaging in illegal practices. Contact us for more information or to request a thorough review of your case. 

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